ACT CIVIL & ADMINISTRATIVE TRIBUNAL

FANDS (ACT) PTY LTD v COMMISSIONER FOR ACT REVENUE (No. 2) (Administrative Review) [2017] ACAT 112

AT 16, 23, 24, 25, 26, 27/2017

Catchwords: ADMINISTRATIVE REVIEW – unimproved value of subject land – reassessment of value five years after change in purpose clause of Crown lease – appropriate valuation methodology for land in Braddon – what sales of land are comparable to subject land – role of Commissioner of ACT Revenue to determine unimproved value of land – role of Commissioner to redetermine unimproved value of land if a change of circumstances happens – role of Commissioner to reassess tax liability of taxpayer – whether Commissioner properly exercised discretionary power in reassessing tax liability for previous five years from date of redetermination – whether Commissioner’s decision should be set aside

Legislation cited: ACT Civil and Administrative Tribunal Act 2008 ss 26, 52, 68, 89, 97, 108, 109Land (Planing and Environment) Act 1991Land Titles Act 1925 s 178BLegislation Act 2007 s 84Planning and Development Act 2007 ss 276, 277, 471Planning and Development (Lease Variation Charge) Amendment Act 2011Rates Act 2004 ss 6, 9, 10, 11, 11A, 12, 14, 17, DictionaryTaxation Administration Act 1999 ss 4, 7, 9, 10, 11, 14, 74, Dictionary

Subordinate Legislation cited: Land Titles Regulation 2015

Cases cited: Boland v Yates Property Corporation Pty Ltd (1998) 74 ALR 209Brisbane City Council v Mio Art Pty Ltd & Anor [2011] QCA 234 Challenger Property Asset Management Pty Ltd v Stonnington City Council (2011) 34 VR 445City Hill Pty Ltd v ACT Planning and Land Authority [2015] ACTSC 40

FANDS (ACT) Pty Ltd v Commissioner for ACT Revenue (No 1) [2017] ACAT 71Federal Commissioner of Taxation v St Helen’s Farm (ACT) Pty Ltd (1981) 146 CLR 336Giusida Pty Ltd v Commissioner for ACT Revenue [2016] ACTSC 275Housing Commission of NSW v Falconer [1981] NSWLR 54Inez Investments Pty Ltd v JL Dodd (1979) 28 The Valuer 501James v Commissioner for ACT Revenue [2013] ACAT 32Junstamp Pty Limited & Ors v Commissioner for ACT Revenue [2013] ACAT 50Western Australian Planning Commission v Arcus Shopfitters Pty Ltd [2003] WASCA 295

Tribunal: President G Neate AMAssessor J Trickett

Date of Orders: 22 December 2017Date of Reasons for Decision: 22 December 2017

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AUSTRALIAN CAPITAL TERRITORY )CIVIL & ADMINISTRATIVE TRIBUNAL )

AT 16, 23, 24, 25, 26, 27/2017

BETWEEN:

FANDS (ACT) PTY LTDApplicant

AND:

COMMISSIONER FOR ACT REVENUE Respondent

TRIBUNAL: President G Neate AM

DATE: 22 December 2017

ORDER

1. The Tribunal orders that:

1. The Commissioner’s decision relating to the objection to the 2011

redetermined unimproved value of the subject land be set aside and the

objection allowed.

2. The objection decision made by the Commissioner for ACT Revenue for

2012-2013 be remitted to the Commissioner to give effect to the issue

identified in relation to the average unimproved value of the subject land.

3. The Commissioner calculate the amount of any interest paid by FANDS

on:

(a) the repayments made after 15 October 2016, being the sum

calculated only in respect of those periodic payments;

(b) the amount incorrectly assessed for the year 2011; and

(c) the amount incorrectly assessed for the year 2012 and any

subsequent year once the averaging provision of section 14 of the

Rates Act 2004 is applied.

4. The parties provide the Tribunal with a draft minute of orders to give

effect to the findings and conclusions set out in paragraphs [278]-[282] of

these reasons for decision by 29 January 2018.

5. Each party has liberty to apply to the Tribunal on three days’ notice in

order to seek clarification in relation to any of the findings and

conclusions set out in paragraphs [278]-[282] of these reasons for

decision.

………………………………..President G Neate AM

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REASONS FOR DECISION

Introduction

1. This case concerns challenges to the reassessment in September 2016 by the

Commissioner of ACT Revenue (the Commissioner) of the unimproved value

of Block 15 Section 28 in Braddon, Australian Capital Territory (the subject

land) and the consequent increases in the amounts of rates, land tax, and City

Centre Marketing and Improvements Levy (CCMIL) payable by FANDS

(ACT) Pty Ltd (FANDS) for the years 2011 to 2016. The total amount payable

was $613,614.53.

2. The subject land is located at 11 Lonsdale Street, Braddon. It has an area of

1, 254 square metres. It comes within Territory Plan 2008 zoning CZ3: Services

Zone. The land is also subject to the Braddon Precinct Map and Code in the

Territory Plan.

3. FANDS is a registered proprietary limited company. It purchased the Crown

lease of the subject land in about mid-2002 and the transfer was registered in

December that year. In 2017, FANDS sold the site to JVSJ Lonsdale Pty Ltd

and NMAM Lonsdale Pty Ltd for $6,200,000. The contract was dated 10

February 2017 and the settlement was on 9 May 2017.

4. Having been advised of the reassessments of the unimproved values of the

subject land for the years 2011 to 2016 and the amounts of money it owed,

FANDS wrote to the Commissioner on 29 September 2016 setting out in detail

its objections to each of the unimproved values from 2011 onwards.

5. In a letter dated 3 March 2017, FANDS was advised that the Commissioner

disallowed its objection to his decision, and confirmed the valuation notices

under review for 2011 to 2016.

6. On 28 March 2017, FANDS applied to the ACT Civil and Administrative

Tribunal (the Tribunal) for a review of the decision to disallow its objection.

Orders sought

7. In its statement of facts and contentions, FANDS sought orders that:

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(a) the reviewable decision of the Commissioner be set aside and substituted

with the decision which gives effect to the original determinations of

unimproved value for the subject land for the fiscal years from 2011 to

2016;

(b) the subsequent reassessment of rates, land tax and CCMIL be set aside

and the correct assessments be issued; and

(c) any payments of rates paid by FANDS in reliance on the notices dated

6 September 2016 be remitted back to FANDS together with interest.

8. The final submissions made by FANDS to the Tribunal reiterated the orders

sought set out at (a) and (b) above.

9. The Commissioner’s statement of facts and contentions sought simply that the

decision under review be confirmed. The Commissioner maintained that

position in his final submissions subject to two qualifications, the basis for

which is apparent later in these reasons for decision:1

(a) set aside the decision relating to the objection of the 2011 redetermined

unimproved value and substitute it with a decision that the objection be

allowed; and

(b) remit to the Commissioner the objection decisions for the 2012-2013

redetermined unimproved values to give effect to the issue identified in

relation to average unimproved value calculation for the subject land.

Procedural matters

10. The hearing of the applications was unusual in two respects. First, the Tribunal

was assisted by an assessor, James John Trickett.2 Apparently, this was the first

occasion when the Tribunal has conducted a hearing with an assessor, and the

Commissioner made written and oral submissions concerning the role of an

assessor appointed to the Tribunal.

11. A detailed ruling about the role of the assessor in these proceedings was given

on the morning of the first day of the hearing. At the request of counsel, the

1 See paragraphs [232] to [238]2 Mr Trickett is a retired lawyer and valuer. He was the Valuer-General

for Queensland, then a member of the Land Court of Queensland and President of that Court

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reasons for that ruling were published separately from these reasons for

decision.3

12. It is not necessary to repeat those reasons or set out the ruling. However, to

assist an understanding of the decision and reasons in this decision, it is

appropriate to note that:

(a) the assessor was appointed to provide specialist or technical advice to the

Tribunal;4

(b) although the assessor was appointed by notifiable instrument as a member

of the Tribunal,5 and sat with me during the hearing, his role was confined

to providing advice and ensuring that I comprehended the evidence given;

(c) the assessor did not make decisions in relation to the applications that are

the subject of these proceedings;6

(d) the decision on the issues in these applications is mine and mine alone.

13. The second, though not as unusual, feature of the hearing was that expert

witnesses gave their evidence concurrently. To a large extent, the resolution of

the issue about the unimproved value of the subject land at the relevant dates

turns on the expert evidence of two valuers: Noel McCann (a principal of MAS

Strategic Property Services Pty Ltd (MAS)) called by FANDS and Carlo King

(the Managing Valuer of the ACT Valuation Office). Each is a qualified valuer

with long experience, and their respective qualifications to give expert evidence

were not in issue. They gave their evidence concurrently, in the sense that they

sat next to each other for the duration of most of their evidence and, in addition

to answering questions from the Tribunal and counsel, they took the opportunity

to offer comments or observations in response to each other’s evidence.

14. That process enabled the Tribunal to obtain a clearer indication of what was

agreed between the experts as well as the points of difference, and the reasons

for those differences. The process might have saved hearing time. Taking

3 FANDS (ACT) Pty Ltd v Commissioner for ACT Revenue (No 1) [2017] ACAT 71

4 ACT Civil and Administrative Tribunal Act 2008 s 97(3), see also ss 26, 108(1)

5 ACT Civil and Administrative Tribunal Act 2008 ss 89, 97, 1096 See ACT Civil and Administrative Tribunal Act 2008 s 52(2)

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evidence from the witnesses serially and separately might not have led to such a

clear and comprehensive picture of the valuation evidence and might have been

less complete than the form in which it is given.

Chronology of key events

15. Events between 2008 and 2016 provide the background to the current dispute.

At all material times, FANDS was the lessee of the subject land.

16. On 28 March 2008, FANDS applied to the ACT Planning and Land Authority

(ACTPLA) to vary the Crown lease over the subject land by adding specified

uses (including “residential uses”) to the purpose clause. At that time, the

permitted uses were one or more of the following:

(i) industry and industries (other than a noxious trade);

(ii) business agency;

(iii) office;

(iv) public agency;

(v) shop.

17. In a notice of decision dated 22 September 2008, a delegate of the ACTPLA

approved the application. Purpose clause 1(f) was amended to read:

To use the premises only for one or more of the following purposes:

(i) industry and industries (other than a noxious trade);

(ii) business agency;

(iii) office;

(iv) public agency;

(v) shop;

(vi) residential use; and

(vii) restaurant;

PROVIDED ALWAYS THAT the combined maximum gross floor area used for supermarket or other shop selling food shall not exceed 200 square metres AND FURTHER PROVIDED ALWAYS THAT residential use shall not be permitted at the ground floor level.

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18. The approval was subject to specified conditions, including conditions to be

satisfied before the approval would take effect. The lessee was obliged to do all

that was necessary to ensure that the Instrument of Variation giving effect to the

approval was registered at the Registrar-General’s Office within 14 days of

being notified that the Instrument of Variation was available for registration or

within such further time as may be approved by the ACTPLA.

19. In order to register the Crown lease variation, FANDS was required to pay any

change of use charge (CUC) payable in respect of the variation. The ACTPLA

determined the CUC on 24 January 2011.

20. On 3 May 2011, FANDS applied to the ACAT for a review of the decision

(AT 44/2011). On that application, FANDS noted that, for the purpose of the

decision being reviewed, the V1 “after” value was $5,763,000 and the V2

“before” value was $5,385,000. Consequently, the added value of the Crown

lease variation was $378,000 and the CUC, calculated as 75% of that amount,

was $283,500.

21. Correspondence on behalf of FANDS from Steven Flannery7 to the ACTPLA

on 13 July 2011 stated that that FANDS relied on advice from Savills to the

effect that, on a redevelopment basis, the “after” value of the subject land was

“only marginally greater” than the “before” value to account for the “nominal

increased flexibility resulting from the addition of a number of land uses.”

(Exhibit W)

22. On 21 July 2011, the ACAT made consent orders8 in terms of the agreement

signed by FANDS and the ACTPLA to the effect that the decision of the

ACTPLA was varied and the CUC for the variation of the Crown Lease for the

subject land was $50,250 (instead of $283,500). It was noted that the V1 “after”

value was $5,452,000 and the V2 “before” value was $5,385,000 (a difference

of $67,000).

23. Mr Flannery gave oral evidence that the figures entered in the consent decision

were improved values. He noted, however, that FANDS’s concern was less with

7 Mr Flannery is a property valuer and advisor to FANDS. He is the husband of one of the directors of FANDS and has negotiated on behalf of FANDS

8 FANDS (ACT) Pty Ltd v ACT Planning & Land Authority, AT 11/44

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the values entered than the amount of money that FANDS had to pay to obtain

the use of the land.

24. On 6 October 2011, the ACTPLA applied to the Registrar-General of the Land

Titles Office to register at the variation, and on 2 November 2011 the variation

was registered. The main effect of the change was to add to the purpose clause

the use of the premises for “residential use” and “restaurant”.

25. As a consequence of the variation registered on 2 November 2011, the premises

can be used for one or more of the purposes referred to in [17]. The use of the

land is subject to the provisos noted earlier, and that the Crown lessee include a

minimum of 20 car spaces on site.

26. In August of each of the years from 2009 until 2016, the Commissioner issued a

Valuation Notice to FANDS stating the assessed unimproved value of the

subject land effective from 1 January of that year. Those assessments were as

follows:

Date of notice Date of redetermination

Unimproved value

1 January 2009 $2,175,000

1 January 2010 $2, 066,000

15 August 2011 1 January 2011 $1,859,000

15 August 2012 1 January 2012 $1,766,00015 August 2013 1 January 2013 $1,678,00018 August 2014 1 January 2014 $1,678,00017 August 2015 1 January 2015 $1,678,000

27. On the same days, the Commissioner issued corresponding notices about rates

payable in respect of the subject land by FANDS for each of the relevant

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financial years. Notices were also sent in relation to land tax and the CCMIL

payable in respect of the subject land.

28. On 16 August 2016, the Commissioner issued a rates assessment notice for the

year 1 July 2016 to 30 June 2017, based on an Average Unimproved Value

(AUV) of $1,678,000, the same amount as for the immediately preceding three

years.

29. Less than three weeks later, in a letter dated 6 September 2016 from an officer

of the ACT Revenue Office, FANDS was advised that the subject land “had a

recent change in purpose clause allowing it to be used for one or more” of the

purposes listed in the letter. “This has led to an increase in the unimproved

values” as at 1 January 2009, 2010, 2011, 2012, 2013, 2014, 2015 and 2016.

Pursuant to section 11A of the Rates Act 20049, the unimproved land values had

been “amended.” For each of those years, the amendment had resulted in an

increase in the unimproved value of the land, the amount of which was specified

in the letter as follows:

Date of redetermination

Previous unimproved value

Increased unimproved value

1 January 2009 $2,175,000 $4,320,000

1 January 2010 $2,066,000 $4,800,000

1 January 2011 $1,859,000 $4,800,000

1 January 2012 $1,766,000 $4,800,000

1 January 2013 $1,678,000 $4,800,000

1 January 2014 $1,678,000 $4,800,000

1 January 2015 $1,678,000 $4,800,000

1 January 2016 $1,678,000 $4,800,000

30. FANDS was also advised that the amendments had resulted in specified changes

to the AUV and “corresponding adjustments to the rates charges” from 6

October 2011. The letter set out the adjusted rates and CCMIL for part of the

financial year 2011-2012, and for each of the full financial years until 2016-

2017. It also noted an increase in land tax for the period 6 November 2011 to 30

June 2012. Enclosed with the letter were the amounts of adjusted rates, land tax

9 Section 11A of the Rates Act 2004 is quoted at [37] of these reasons for decision.

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and CCMIL notices, and a notice of redetermination of unimproved values

“which shows the new values for your property.”

31. Rates payable in relation to the subject land, as originally assessed and as

revised are set out in the following table.

Financial year Original assessment Adjusted assessment in 2016

2011-12 $23,948.89 $22,258.9210

2012-13 $55,248.50 $87,563.19

2013-14 $67,965.85 $122,536.62

2014-15 $76,212.63 $149,543.03

2015-16 $85,129.21 $164,107.54

2016-17 $90,517.64 $175,389.96

32. On 6 September 2016, FANDS was also advised that:

(a) as a consequence of the section 11A adjusted rates it was to pay

$546,009.30 by 15 December 2016;

(b) as a consequence of section 11A adjustment to land tax for the period

6 October 2011 to 31 December 2011, and for the years 2012 and 2013, it

was to pay $30,462.19 by 15 October 2016;

(c) as a result of section 11A adjustments to CCMIL from 6 October 2011 to

30 June 2012 and for the next five financial years (to 30 June 2017) it was

to pay $37,143.04 by 15 October 2016.

33. There followed correspondence between FANDS and the Commissioner in

which, in summary:

(a) by letter dated 29 September 2016 sent by email on 4 October 2016,

FANDS objected to the redetermination of the unimproved value for the

subject land;

(b) on 18 October 2016, FANDS wrote to the Commissioner requesting an

extension of time to pay the debt and a waiver of the interest component;

10 For period 6 November 2011 to 30 June 2012

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(c) on 21 October 2016, the Commissioner wrote to FANDS agreeing to

interim payment arrangements for six months pending the outcome of the

objection, but noting that interest would continue to accrue on the

outstanding balance for the account;

(d) on 3 March 2017, the Commissioner disallowed the objection by FANDS;

(e) on 28 March 2017, FANDS applied to the Tribunal for a review of the

Commissioner’s decision.

The issues

34. The parties agreed from the outset that there were essentially two issues in this

case involving:

(a) assessments of the unimproved value of the subject land at the relevant

dates; and

(b) the exercise of the Commissioner’s discretion in reassessing the

unimproved value of the subject land and adjusting the amounts of rates,

land tax and CCMIL payable in relation to the subject land for each of the

relevant years.

Unimproved value of the subject land at relevant dates

35. To resolve the first issue it is necessary to consider the statutory provisions

about the unimproved value of parcels of rateable land in the ACT, and the

expert and documentary evidence about the unimproved values of the subject

land in the relevant years.

Statutory provisions about unimproved value

36. The Rates Act 2004 contains a detailed scheme for determinations and

redeterminations of the unimproved value of parcels of rateable land. The

relevant sections:

(a) require the Commissioner to determine the unimproved value of a parcel

of land that becomes rateable, with the first determination for a financial

year being as at 1 January in the immediately preceding financial year

(section 9);

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(b) require the Commissioner, as soon as practicable after 1 January

thereafter, to redetermine the unimproved value of the parcel of land as at

that date for the financial year immediately following the date (section

10);

(c) enable the Commissioner to redetermine the unimproved value of a parcel

if an error was made in relation to a determination of the unimproved

value of that parcel as at 1 January in a particular year (section 11);

(d) require the Commissioner to record particulars of each determination of

the unimproved value of a parcel of land and to give written notice of that

amount to the owner (section 12);

(e) provide that rates are imposed on rateable land using a formula that adopts

a fixed charge plus a percentage rate of the AUV for the preceding three

years for the relevant site (section 14); and

(f) require that an assessment notice for the rates payable for a year for a

parcel of land must state a date for payment of the rates (which payment

date must not be a date earlier than four weeks after the date of the notice)

and that rates are payable on that date (section 17).

37. Section 11A of the Rates Act 2004 is integral to the resolution of issues in these

matters as it provides for a possible redetermination of the unimproved value of

a parcel of land where a ‘change of circumstances’ affects the unimproved value

of that land.

11A Redetermination—change of circumstances

(1) This section applies if a change of circumstances happens in relation to a parcel of land that affects the unimproved value of the land.

(2) The commissioner may redetermine the unimproved value of the parcel as at a date if the unimproved value as at that date is used in calculating the average unimproved value of the land for the year in which the change of circumstances happens.

(3) The commissioner may also redetermine the unimproved value of the parcel as at a later date if a determination of the unimproved value as at that date did not take the change of circumstances into account.

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(4) A redetermination under subsection (2) applies to the parcel for the period—

(a) beginning on the day the change of circumstances happened; and

(b) ending on 30 June in the next calendar year.

(5) A redetermination under subsection (3) applies to the parcel for the period—

(a) beginning on 1 July in the calendar year when the redetermination is made; and

(b) ending on 30 June in the next calendar year.

Example—s (4)

On 1 September 2009, Mungo obtained development approval for an authorised use of Mungo’s parcel of land (the change of circumstances) that increases the unimproved value of the parcel. Before the change of circumstances, the commissioner determined the unimproved value of the land as at 1 January 2007 as $260 000, 1 January 2008 as $280 000 and 1 January 2009 as $300 000.

The average unimproved value (the original AUV) of the land for the year beginning 1 July 2009 was calculated as—

($260 000 + $280 000 + $300 000)/3=$280 000

After the change of circumstances, the commissioner redetermined the unimproved value of the land as at 1 January 2007 as $320 000, 1 January 2008 as $340 000 and 1 January 2009 as $360 000.

The average unimproved value (the recalculated AUV) of the land was recalculated as:

($320 000 + $340 000 + $360 000)/3=$340 000

The original AUV applies for the period starting on 1 July 2009 and ending on 31 August 2009, and the recalculated AUV applies for the period starting on 1 September 2009 and ending on 30 June 2010.

Note An example is part of the Act, is not exhaustive and may extend, but does not limit, the meaning of the provision in which it appears (see Legislation Act, s 126 and s 132).

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38. The key concept underpinning the operation of the scheme is the ‘unimproved

value’ of land. Section 6 of the Rates Act provides, in part:

Meaning of unimproved value

(1) The unimproved value of a parcel of land held under a lease from the Commonwealth is the capital amount that might be expected to have been offered on a date (the base date), for the lease of the parcel, assuming that—

(a) the only improvements on or to the parcel were the improvements (if any) by way of clearing, filling, grading, draining, levelling or excavating—

(i) if the Territory or Commonwealth had, before the parcel became rateable as a separate parcel, granted a development lease of land that included the parcel—made by the lessee under that lease or by the Territory or Commonwealth, or the cost of which was met by that lessee or by the Territory or Commonwealth; or

(ii) in any other case—made by the Territory or Commonwealth or the cost of which was met by the Territory or Commonwealth; and

(b) the circumstances that existed on the prescribed date also existed on the base date; and

(c) on the base date, the lease had an unexpired term of 99 years; and

(d) a nominal rent was payable under the lease for the 99 year term.

39. At the heart of the dispute in the present case are differences in expert opinions

of Mr King and Mr McCann about the unimproved value of the subject land for

each of the years from 2011 to 2016. Those differences are the product of

alternative methodologies for assessing the unimproved value of land, and the

selection and analysis of sales of comparable parcels of land in Braddon during

those years.

Evidence about the unimproved value of the subject land: valuation methodology

Applicant’s valuation methodology

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40. It is appropriate to highlight three aspects of Mr McCann’s methodology. First,

for each of the years in question, he sought to place himself in the position of a

valuer making a valuation for that year, using relevant sales information that

would have been available at that time. The analyses were made separately for

each consecutive year, rather than retrospectively in light of subsequent sales.

41. Second, Mr McCann analysed comparable sales to a rate per square metre based

on site area rather than a rate per square metre of Gross Floor Area (GFA). The

principal features were site area and price, the purpose clause of each lease and

improvements (including physical buildings) on each site and their relevance to

the income generating capacity of those parcels, as well as amounts for CUC or

Lease Variation Charge (LVC) as appropriate.

42. Third, he rejected the GFA comparison as a basis of valuation. Although he

conceded that he had adopted the GFA approach in giving evidence in the

Junstamp case11 in 2013, he said that he had since changed his mind. In his

opinion, the GFA approach is no longer appropriate in the Braddon precinct, as

many developments were able to achieve plot ratios greater than 3:1 site area.

That greater potential would be the highest and best use which a prudent

purchaser would have in mind, and accordingly the site area approach was more

appropriate.

Respondent’s valuation methodology

43. Mr King stated that he had considered sales with varying degrees of

comparability to the subject property and relied on the direct comparison

valuation method which he considered to be the most appropriate valuation

methodology. More specifically, Mr King stated that he had:

(a) assessed the value of the subject property as a vacant parcel of land, ready

for development;

(b) reviewed the Crown lease purpose clause and understood that the lease

allows commercial and residential uses and that residential use above the

ground floor at the first floor is unusual in Braddon;

11 Junstamp Pty Ltd and Ors v Commissioner for ACT Revenue [2013] ACAT 50

15

(c) considered the development rights conferred under the Territory Plan and

adopted the view that, without formal planning advice to the contrary, a

maximum 3:1 plot ratio would be allowed where at least 1:1 is residential

use;

(d) analysed the comparable sales evidence back to vacant land value and

made adjustments in order to compare and contrast the sales with the

subject property; he also included the recently confirmed sale of the

subject property and the pending sale of 34-36 Mort Street, Braddon,

neither of which were considered by McCann for reasons explained later;

(e) adopted the direct comparison method in order to derive unimproved

value by comparing the GFA that could be achieved on each of the sale

properties with the GFA that could be achieved on the subject land.

44. In arriving at the GFA for the sales and the subject land, Mr King conceded that

some developers were achieving plot ratios greater than 3:1. In his opinion, they

were the exceptions and were not always achieved. Accordingly, he preferred to

make comparisons on the basis of the GFA of 3:1 that could be achieved with

certainty.

45. When analysing the sales, Mr King did not take into account amounts for CUCs

and LVCs.

Submissions about the unimproved value of subject land

46. FANDS submits that the site area analysis methodology should be preferred to

the GFA methodology because:

(a) Mr McCann relied on sales of similar blocks of good, flat land which are

governed by the same planning requirements, and chose the site area

approach to compare sales, letting the market determine the price for each

lease (which price would be influenced by the estimate the purchaser

made of the GFA); and

(b) the GFA is not a reliable guide to the value of Braddon properties.

47. Although FANDS acknowledges that the amount of GFA that a lessee can

achieve will affect the value of the lease, FANDS submits that:

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(a) the principal leases used as comparable sales did not contain maximum

GFA clauses;

(b) the Territory Plan does not impose a mandatory plot ratio, but only

provides a maximum building envelope;

(c) the Territory Plan contains a rule with a non-mandatory plot ratio of 3:1,

but that rule has been exceeded; and

(d) purchasers would purchase leases without knowing the exact amount of

GFA they could obtain, but with their own estimates of what they thought

the GFA was likely to be for those leases within the building development

and by reference to relevant sections in the Territory Plan. On that basis,

FANDS submits that, in the particular circumstances of the Braddon

precinct, the site area approach is a better measure of value.

48. The Commissioner’s submissions focus on different components of the two

valuers’ methodology, in particular references to the value of improvements,

GFA, and CVCs and LVCs.

49. Value of improvements: The definition of ‘unimproved value’ in section 6 of

the Rates Act 2004 requires that the value of all improvements (other than those

expressly listed) be excluded from the valuation. They are generally structural

improvements that add value to the land. In his analysis of sales, Mr McCann

drew attention to the income stream generated from the use of improvements on

some of the sale land. He reasoned that the improvements add value, and that

value should be deducted. The Commissioner criticised that approach on the

basis that:

(a) it focuses on what individual purchasers were doing with individual

blocks and what they took into account when they paid the price for each

block, rather than on the overall picture of the Braddon precinct from time

to time;

(b) purchasers were paying for the highest and best potential use of the land

(that is, commercial use on the ground and first floors, and residential use

above), and the fact that owners were using their blocks for lesser

purposes is almost entirely irrelevant;

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(c) section 6 of the Rates Act 2004 and the relevant authorities point to a

hypothetical prudent purchaser who will pay for the highest and best use

of the property. Sales evidence demonstrates the state of the market. The

assumption is that purchasers in this market will be motivated by their

willingness to buy for the highest and best use available. Even if an

individual purchaser intends to use the property for other than the highest

and best use, the price they pay on an arm’s length transaction in an open

market will be dictated by the price other purchasers are prepared to pay

for that highest and best use;

(d) there is almost always a delay between purchasing a site and being able to

realise its redevelopment opportunities (for example, due to delays in the

design and approval process, delay in obtaining finance or, in the case of

developers who have multiple blocks, delays related to serial or staged

developments);

(e) the income stream from current buildings is serendipitous and temporary,

and not the highest and best use of those blocks.

50. Accordingly, the Commissioner submits, the Tribunal should for the most part

ignore the value of improvements on the blocks used as comparable sales.

51. Counsel for FANDS took issue with that analysis on the basis that a purchaser

who outbid others will use the land for its own purposes, not necessarily to

redevelop it for its highest and best use. In cases where the owner holds the

property in order to realise its development potential at a later date, there will be

some value in the improvements.

52. GFA: As senior counsel for the Commissioner noted, whether the GFA or site

area method of analysis is used, some adjustments have to be made, especially

when comparing parcels in different streets with different zoning (for example

CZ2 and CZ3) and hence different constraints on the development of individual

parcels (for example, in relation to permitted height).

53. The Commissioner submits that the GFA method has merit in the Braddon

precinct because it can differentiate between the different outcomes available on

different blocks. He notes that the higher plot ratios achieved on some parcels

might be a consequence of the different zonings and the qualitative measure

18

available on some parcels under Figure 3 of the Braddon Precinct Code. The

GFA is what a developer is entitled to use. If they can achieve more than that, it

is to their advantage. But the GFA is the reliable measure of what can be

achieved for each block. Having certainty about the minimum allowed gives a

value greater confidence in comparing different blocks.

54. The Commissioner’s submissions criticise Mr McCann’s approach on the basis

that, in summary:

(a) although some purchasers have been able to obtain a plot ratio greater

than 3:1 in the CZ3 zone in Braddon, plot ratios in excess of 3:1 do not

seem to be happening consistently across that zone;

(b) even if purchasers have been able to obtain a greater plot ratio, that does

not mean that a GFA analysis was less preferable, given that different

blocks have different potential and some adjustments must be made in the

sales analysis for that fact (otherwise one is not comparing like with like).

55. By contrast, the Commissioner submits that:

(a) the variable plot ratios being achieved support Mr King’s approach

because, as he explained, in order to conduct evaluation using comparable

sales one needs a degree of certainty or consistency of outcome while still

allowing for the different extent of the development opportunity presented

by the blocks in question (hence he used a GFA analysis because the

extent of the opportunity is different on different blocks notably the

comparison between CZ2 zoning on Torrens Street and CZ3 zoning on

Mort and Lonsdale Streets);

(b) Mr King relied on what was certain (Rule 15 in the Braddon Precincts

Code which definitely allowed a plot ratio of 3:1) even if some blocks

were able to take advantage of Criterion 15 to obtain a slightly higher

ratio;

(c) Mr King’s approach led to certainty and consistency, while being

necessarily conservative, and provided a reliable way of comparing one

block with another, taking account of different opportunities on different

19

blocks with a degree of certainty not available with Mr McCann’s

analysis.

56. The Commissioner’s submission also:

(a) notes that Mr McCann’s analysis of one sale in the present case (27

Lonsdale Street) is significantly different from his analysis as set out in

the decision of a differently constituted Tribunal in the Junstamp case12;

and

(b) suggests that Mr McCann’s evidence in the present case did not justify

such a significant difference of approach. (The extent to which reference

should be made to other proceedings before differently constituted

Tribunals is discussed later in these reasons.)13

57. CUCs and LVCs : The Commissioner notes that Mr King had not taken CUCs

and LVCs into account when analysing the sales because they were difficult to

estimate in advance and hence were difficult to justify as being definitive of the

amount the purchaser had expected to pay. Mr King explained that the amount

of CUC or LVC would be a matter of opinion in relation to a particular sale at

the date of sale, and the original intention of the developer could be different by

the time the application for the variation of a Crown lease had been approved.

The Commissioner submits that if some amount for those charges should be

included in the amount paid, it follows that Mr King had understated the value

of the blocks. That approach worked to the benefit of the ratepayer while

providing more precision and certainty in an inexact process. For those reasons,

the Commissioner submits that the Tribunal should prefer the approach taken by

Mr King.

Consideration of key factors in assessing the unimproved value of subject land

58. Any assessment of the unimproved value of the subject land for each of the

relevant years involves selection of sales of parcels of land that are sufficiently

comparable to the subject land, and an analysis of those sales using appropriate

valuation methodology.

12 See Junstamp Pty Ltd and Ors v Commissioner for ACT Revenue [2013] ACAT 50 at [85]

13 See [78] to [80]

20

59. The valuation expert witnesses, Mr McCann and Mr King, provided reports and

gave oral evidence to the Tribunal. Both are very experienced valuers. They

endeavoured to assist the Tribunal, and they did so.

60. The valuers largely agreed with one another on the factual background and that

the most appropriate valuation method was by direct comparison with

comparable sales.

61. The differences between them concerning the unimproved value of the subject

land stemmed largely from the different valuation approaches that each adopted

in the selection and analysis of the sales. Both agreed that eight sales of

properties occurred in the area between August 2008 and August 2014, although

they disagreed about the degree of comparability of some sales and the method

of analysis of each sale. They acknowledged that two sales occurred in 2017 but

disagreed about the relevance of those sales to these proceedings.

62. Both generally agreed that the sale properties were purchased with the intention

of development. Some owners proceeded to development without delay, while

others held the parcels for some years while income was derived from existing

improvements.

63. The post-sale use of the land affected the approach which each valuer adopted

in analysing individual sales. Mr McCann was of the opinion that, although the

longer term intention of purchasers was for redevelopment, in many instances

the property was purchased as an investment property in order to derive income

from existing improvements in the short to medium term and then to redevelop

when the time was right, or sell to a developer for capital gain. That opinion

determined his approach to the analysis of those sales. If development did not

proceed immediately, he concluded that the improvements on the land added

value and the added value should be deducted in the analysis of the sale to

arrive at the unimproved value of that parcel of land.

64. On the other hand, Mr King was of the opinion that the intention of individual

purchasers was irrelevant. All sales were for redevelopment, and that was the

highest and best use of each site. The timing of any development depended on a

variety of circumstances. But the correct test was what the hypothetical prudent

purchaser would pay for the highest and best use of the property.

21

65. It was common ground that, in order to develop each site to its highest and best

mixed use development, it would be necessary for each purchaser to seek a

variation of the purpose clause in the Crown lease. Depending on when the

variation occurred, that would involve the payment of a CUC or LVC. The

question for a valuer (and for the Tribunal in this case) is whether the amount of

such a charge should be taken into account in determining the unimproved value

of each parcel of land.

66. Mr McCann was of the opinion that, as each purchaser would be aware that

such payment was required, the sale price in each case should be adjusted by

adding the estimated CUC before analysis.

67. Mr King disagreed. In his view, because the extent of the charge would depend

upon the type of development applied for in each case, it was difficult to

forecast the amount of the charge in advance of any application. When

analysing each sale, he disregarded any such charge. Mr King agreed that by not

adding an amount for LVC when analysing the value of each property, his

estimates were sometimes less than those calculated by Mr McCann. He said

that his figure was “conservative” and agreed that, as a consequence, if his

valuations were accepted by the Tribunal the ratepayers would pay less than

they might otherwise.

68. As noted above, the valuers also disagreed as to the method of comparison of

each analysed sale price. Mr McCann compared them on a site value basis and

Mr King compared the GFA for each parcel.

69. The outcome of the different approaches to the assessment of the unimproved

value of the subject land for each year is summarised below:

Year Mr King’s assessment

Mr McCann’s assessment

Percentage (%) difference

2011 $4,800,000 $3,876,000 20%2012 $4,800,000 $3,876,000 20%2013 $4,800,000 $3,876,000 20%2014 $4,800,000 $4,389,000 9%2015 $4,800,000 $4,390,000 9%2016 $4,800,000 $4,389,000 9%

22

70. When assessing the most appropriate approach to ascertain the unimproved

value of the subject land for each year, it is worth noting judicial authority for

the proposition that there is no one method of valuation and there is no legal

principle that requires any particular method to be rejected or preferred.14

71. In light of the sales evidence (informed by a view of the sale parcels) and the

expert opinion evidence, I have concluded that the most appropriate approach to

ascertaining the unimproved value of the subject land for each year is on the

basis that:

(a) all properties relevant to the decision in these proceedings15 were

purchased for development purposes, rather than for the purpose of

obtaining investment income;

(b) although some improvements were retained for a period before demolition

and redevelopment, a hypothetical prudent purchaser would consider that

the highest and best use of each parcel is for mixed commercial and

residential use;

(c) the timing of development depended (or depends) on the circumstances of

individual purchasers and is not relevant to this exercise; and

(d) any income from retained improvements did (or does) no more than offset

holding costs and the CUC or LVC which must be incurred to change the

purpose clause in each Crown lease so that the highest and best use of the

land can be achieved.

72. I accept that a developer could or would need to pay a CUC or LVC to achieve

the highest and best use of a parcel of land in Braddon. Consequently, a prudent

purchaser would know that there would be such a charge. However, I am not

satisfied that the amount of such a CUC or LVC could be predicted with

sufficient certainty at the time of purchase so that it would affect the sale price

to an identifiable extent. The uncertainty in predicting the amount of CUC or

14 Giusida Pty Ltd v Commissioner for ACT Revenue [2016] ACTSC 275 at [109] citing City Hall Pty Ltd v ACT Planning and Land Authority [2015] ACTSC 40 at [69]-[71]; Boland v Yates Property Corporation Pty Ltd (1998) 74 ALJR 289, 267; Challenger Property Asset Management Pty Ltd v Stonnington City Council (2011) 34 VR 445, 456-7 at [17]

15 The sales relied on and not relied on are discussed at [88] to [164]

23

LVC is well illustrated by the amount of CUC paid in relation to the variation of

the purpose clause in the Crown lease of the subject land pursuant to

Development Application 200801732. As noted earlier, the CUC was originally

set at $283,500 but was reduced to $50,250 in an order of the Tribunal made by

consent of the parties on 21 July 2011. In some cases, the purchaser will change

the proposed use of the land from what was anticipated at the date of purchase.

In other cases, it will be some years after purchase when a lease variation

occurs. Those factors will effect the LVC. Consequently, I am not satisfied that

estimates of CUCs or LVCs made years before they might be incurred or actual

amounts determined years after purchase, should be included in the analysis of

sales of comparable parcels of land.

73. Because several developments in the Braddon precinct have been able to

achieve plot ratios at or near 4:1, it can no longer be said that a plot ratio of 3:1

is the highest and best achievable use. Consequently, it is not appropriate to rely

on a GFA based on 3:1 simply because there is certainty that it can be achieved,

as the appropriate valuation method.

74. Two other issues require mention at this stage. First, the other key difference

between the valuers is that Mr King assigned the same unimproved value for

each relevant year while Mr McCann assigned one value for the years 2011 to

2013 and a higher value for the years 2014 to 2016.

75. Mr McCann explained that the global financial crisis had a greater impact in the

market in the early years of the period being considered in these proceedings.

The sale of 28 Mort Street in 2010 started to confirm in his mind that there was

a trend, but he did not adopt that for a couple of years until sales of 32 Mort

Street and 16 Lonsdale Street in 2013 when he felt that there was evidence for

the change in the market. During the three years between 2010 and 2013 there

were no sales. Mr McCann attributed this to such things as the introduction in

July 2011 of the LVC which was of concern to developers because of its

uncertain impact on developer margins. Also, in July 2012, remission for

environmental remediation was introduced. About 2013 and 2014 “a lot of

activity” was stimulated, and, in his opinion, by the time of the 2014 valuation

“there was no argument that the market had been confirmed.”

24

76. Mr King applied the same unimproved value for each of the relevant years

because, when he analysed sales using the GFA method, he did not see a trend

either way over the period from 2008 to 2014. He looked at 2017 sales to

establish whether there was any change for commercial sites from 2014

onwards. Although the exercise was to provide valuations from 2011 to 2016,

previous valuations from 2009 were provided which, in his opinion, “indicated

pretty much a consistent value of unimproved land across the entire period of

review.”

77. That issue can only be decided after the sales evidence is considered.

78. Second, at various stages in their evidence, valuers cited or were referred to

earlier decisions of differently constituted Tribunals about the analysed

unimproved value of some parcels of land in Braddon that were also considered

in these proceedings. The issue is to what extent, if any, the Tribunal as

presently constituted could or should have regard to those parts of those

decisions.

79. In Giusida Pty Ltd v Commissioner for ACT Revenue, Refshauge ACJ stated

that there is “no doubt that a valuation, and, indeed, no mathematical part of a

valuation, will ordinarily be any kind of precedent.”16 His Honour quoted the

following statement of Mason J in Federal Commissioner of Taxation v St

Helen’s Farm (ACT) Pty Ltd:17

I should make the comment that too much attention is given both by valuers and judges to what has been said by courts in other cases on matters of fact and discretionary judgment, not being matters of law. Essentially valuations are estimations involving findings of fact and discretionary judgment made on the evidence given in the individual case and by reference to the circumstances of that case. To apply slavishly the approach taken by a judge in another case, to apply the same discount or capitalization rate that he applied, as if that rate had the force of a general rule, is to attribute to them the force that should be confined to propositions of the law.

80. In the present case it was apparent that some questions asked of valuers about

specific valuations in previous cases were directed to establishing whether they

16 Giusida Pty Ltd v Commissioner for ACT Revenue [2016] ACTSC 275 at [96]

17 Federal Commissioner of Taxation v St Helen’s Farm (ACT) Pty Ltd (1981) 146 CLR 336, 338

25

maintained the approach they adopted previously or had changed their view

about the particular property and, if so, why they had done so. That line of

questioning was appropriate. Beyond that, the relevance or otherwise of the sale

properties to the determination of the unimproved value of the subject land at

the relevant dates has to be decided by reference to evidence given in these

proceedings. Accordingly, little reference will be made to earlier decisions of

the Tribunal about the value of particular parcels of land.

81. On the basis outlined above, I turn to consider the sales evidence to which the

parties referred in support of their contentions about the unimproved value of

the subject land at the relevant dates.

Evidence about the unimproved vale of the subject land: sales evidence

82. Of the eight sales between 2008 and 2014 analysed by both valuers, two are

situated in Lonsdale Street (as is the subject land), three in Mort Street and three

in Torrens Street. The valuers also referred to two sales in 2017, including the

sale of the subject land.

83. As Mr McCann wrote in the MAS report:

We contend that the best market evidence to determine the Unimproved Value (UV) of a site, in accordance with Section 6 of the Rates Act, is to analyse sales of similar vacant sites of a similar value range, with similar development potential. Noting that it is difficult to obtain exact like with like.

The Braddon precinct redevelopment site sales, although relevant, are more difficult to analyse due to likely conflicting opinion on issues such as Crown Lease variation costs, demolition costs and Lease payouts from existing tenants and the added value of improvements. (Exhibit F page 7)

84. Both valuers agreed that the fewer adjustments one has to make to comparable

sales, the more confidence one can have in them. When asked to identify the

sales on which they relied, or to which they gave most weight:

(a) Mr McCann described the Mort Street properties as the “most consistent

in value,” and “less complicated” and “cleaner” in analysis than the two

sales in Lonsdale Street. He suggested that “nobody really knows” what

effect the desire of the adjoining owner had on the sale price of 27

Lonsdale Street, and he and Mr King could argue about the added value of

26

improvements to 16 Lonsdale Street. He did not rely on the Torrens Street

sales.

(b) Mr King said that he had always maintained that the sale of the subject

property was the best sale, but he otherwise agreed with Mr McCann that

the Mort Street sales seemed to be “a lot more consistent.” The Mort

Street properties provided “very good lower indicators in terms of

aggregate price for the subject property.” He would then look at the

Lonsdale Street sales and a qualified sale of 43 to 45 Torrens Street (only

because it had the residential component).

85. Mr McCann also noted that his evidence referred to 2009 and 2010 because that

was relevant to the smoothing or averaging of rating valuations for 2011.

However he seemed to suggest that he had some reservations about his

valuation of 2009 in light of later sales, particularly in Mort Street.

86. It is appropriate to consider the sales evidence in the following sequence:

(a) the Torrens Street sales;

(b) the 2017 sales; and

(c) the remaining five sales between 2008 and 2014.

Torrens Street sales

87. The valuers referred to three sales in Torrens Street:

(a) 5-7 Torrens Street, Blocks 8 and 11 Section 29, sold in June 2009;

(b) 43-45 Torrens Street, Block 23 Section 21, sold in March 2010; and

(c) 43-45 Torrens Street, Block 23 Section 21, sold in March 2011.

For the reasons set out below, I have not relied on those sales in considering the

unimproved value of the subject land at the relevant dates.

88. Torrens Street sale 1, 5-7 Torrens Street: Blocks 8 and 11 Section 29, zoned

CZ2, were sold for $4,100,000 in June 2009. They have an area of 2,390 square

metres (almost twice the size of the subject land), restricted GFA and maximum

building height of two levels.

27

89. Mr McCann had regard to this sale but had not relied on it. He noted that the

improvements (comprising a brick and tile office building) are producing rent

and add value to the land. He allowed $2,100,000 for improvements on the site,

adjusting the sale price to an unimproved values of $2,000,000.

90. Mr McCann noted that, in response to ACT Planning criteria, the Torrens Street

blocks generally have the opportunity for residential development with a

maximum plot ratio of 2:1 (building area: land area). By comparison, blocks in

Lonsdale Street and Mort Street generally have the opportunity for higher

density commercial and residential development with a plot ratio of 3:1, and

development applications in Lonsdale and Mort Streets have achieved GFA plot

ratios close to 4:1 (Exhibit F page 4). There is no retail on the ground floor of

the sale property.

91. Mr King considered this sale to be irrelevant for the purpose of deriving an

unimproved values for the subject land. The sale land is subject to different

zoning. Although the purpose clause allows residential use, it has a restricted

GFA and a maximum building height of two levels. Further, he observed that

restricted GFA and building heights are common in the leases of properties

along this part of Torrens Street but are less common within CZ3 zoned areas of

Braddon. The Torrens Street properties are therefore less likely to be repurposed

to include residential use without planning approval of a significantly increased

GFA yield.

92. In his oral evidence, Mr King accepted that a value of $2,600,000 for the

improvements at the relevant time was a “reasonable figure” and that the

improvements were likely to remain on the property for a lengthy period rather

than be demolished.

93. It is clear from the inspection and the expert evidence that this sale land is not

comparable to the subject land. The main differences are the substantial long

term developments on the subject land and hence the high proportion of value of

the improvements in the sale price, the different zoning, the lower GFA and the

height restrictions on development, and the general amenity and aspect of

Torrens Street as compared with Lonsdale and Mort Streets.

28

94. Torrens Street sale 2, 43-45 Torrens Street: Block 23 Section 21, zoned CZ2,

was sold in two transactions from separate vendors for $5,000,000 in March

2010. The total area is 2,293 square metres, about 80 per cent larger than the

subject land. The parcel has restricted GFA and limited residential use

95. Mr McCann noted in relation to the consolidation of the two blocks in 2009,

that the sales of 43 Torrens Street analyses at $1,567 per square metre of the site

area, or 56 per cent of the sale price paid for 45 Torrens Street (at $2,797 per

square metre). That block is a corner site with a long axis to Girrawheen Street,

overlooking Haigh Park. Also, the vendor of 45 Torrens Street required a

premium to sell because the site had been redeveloped with a two level walk up

brick and tile office building in the 1990s. However, both prices were paid in

full expectation of a change of use and greater GFA.

96. Mr McCann considered the sale to be high by reference to the amount paid for

5-7 Torrens Street. When it was sold it had the maximum GFA in the Crown

Leases, and it was “full of expectation of variation.” He described the sale as

“high” and “out of line” and he had not used it, but included it because it is a

sale on which the Valuation Office relies. Mr McCann added $505,000 to the

sale price ($100,000 for demolition costs and $405,000 for the CUC).

97. Mr King noted that the GFA for the site was less, which made a comparison

with the Lonsdale Street sites difficult. He also noted that, although there were

reasonable quality improvements on the two properties, the developer had opted

to demolish them. Consequently, Mr King added $100,000 for demolition costs.

98. Although the valuers have allowed the same amount for demolition of

improvements, there are sufficient zoning and other differences between these

parcels and blocks in Lonsdale and Mort Streets to make these Torrens Street

sales an unreliable guide to the unimproved value of the subject land.

99. Torrens Street sale 3, 43-45 Torrens Street: The total redevelopment site of

43 and 45 Torrens Street was sold in March 2011 for $6,450,000, with the

vendor retaining a share in the development. It was not a sale which could be

considered to be an arms-length transaction.

29

100. Mr McCann analysed the price to an average of $2,100 per square metre of site

area. However, when comparing the sale prices of the other Torrens Street

property with the sale of these two blocks Mr McCann concluded that the sale

of 43-45 Torrens Street was “high and out of line.” He also considered it

“completely and utterly too high” when compared with the prices paid for

28 Mort Street and 40 Mort Street.

101. Mr McCann did not rely on the second sale because it was to related parties.

102. Mr King noted that the purpose clause included residential to the first level and

some commercial use. He placed “some reliance” on the sale because it gave

him a line on the price for which he would expect that residential mixed purpose

sites in that area would sell. In that respect it was pertinent to consider the sale

in relation to the valuation of the subject property, although the sale and subject

properties are zoned differently. He noted, however, that Junstamp had

indicated the need to exercise caution because the vendor retained a share in the

property after sale.18

103. In addition to the matters highlighted in [98] the distinguishing features of the

consolidated block and the fact that vendor retained a share in the development

mean that the sale property does not provide a reliable basis for determining the

unimproved value of the subject land.

2017 sales

104. The parties referred to two further sales:

(a) the sale of the subject land in February 2017 for $6,200,000; and

(b) the sale of 34-36 Mort Street in June 2017 for $11,500,000.

105. Subject land, 11 Lonsdale Street: In his written report,19 Mr King expressed

the view that the sale of the subject property provides the best evidence of its

value,20 and the fact that a property is improved with structures should not

disqualify the sale from an analysis to derive underlying land value. In his oral

18 Junstamp Pty Ltd and Ors v Commissioner for ACT Revenue [2013] ACAT 50 at [82], [86]

19 Exhibit G pages 12-1320 Citing Inez Investments Pty Ltd v JL Dodd (1979) 28 The Valuer 501

30

evidence, Mr King described the sale of the subject property as “pretty close to

compelling” and one that was weighted more significantly than the other sales.

106. Mr King described it as a “very good sale” because the property went to

auction, there was an open market, the property was passed in and was sold

three months later for $6,200,000. An “informed price” was paid in an

“informed market” for land in Braddon. Mr McCann agreed that the market for

the subject land would have included potential purchasers who might be

interested in a rental stream or development.

107. Detailed oral and written evidence was given concerning the quality and value

of improvements on the land, and communications between the current owners

and Westpac about the proposed use of the subject property. There was much

discussion about whether the developed site would continue to be used as a

going concern or for redevelopment. Mr King had adjusted his analysis by

reference to the number of years of rent the site would provide.

108. In the MAS Report,21 Mr McCann referred to the sale of the subject property.

He did not consider the sale price to be high. He noted that the property has

rental revenue from existing improvements, and contended that the

improvements add value to the property. In his evidence, Mr McCann did not

attempt to analyse the sale, but was critical of aspects of Mr King’s analysis.

109. Although the sale was in 2017, Mr King considered it relevant for present

purposes because there were no sales after 2014 and very limited sales with

residential in the purpose clause.

110. Despite the detailed evidence about the subject property and the circumstances

of its sale, I have concluded that the 2017 sale should be disregarded for the

purposes of this case. The primary reason is that the sale took place well outside

the period in which the unimproved value of the subject land was determined

for 2016. As Mr McCann pointed out in the MAS report, and as section 10 of

the Rates Act 2004 requires, each valuation is at 1 January in the relevant year.

In practice, the valuations have regard to the history of sale and market trends

before the date and potentially up to five months after that date (Exhibit F page

8). The decision on which Mr King relied referred to the relevance of a sale of

21 Exhibit F page 9

31

the subject land “at or close to” the relevant date.22 The 2017 sale did not

influence and could not have influenced the determination of unimproved value

for that year. Indeed, Mr King acknowledged in his oral evidence that he had

determined the unimproved value of the subject land before the sale took place.

In his words, “it didn’t exist.”23

111. It is also relevant to note that substantial adjustments need to be made to

account for the value of improvements (including the basement) and their

current or immediate income generating potential in order to ascertain the

unimproved value of the subject land at the date of sale. The evidence referred

to above shows that there is likely to be some disagreement between valuers

about the adjustments that should be made to the sale price to analyse the

unimproved value of the subject land. In the absence of comprehensive

valuation evidence, the Tribunal would not be in a position to make such a

finding.

112. Whether the sale of the subject land was the beginning of a trend to higher land

values, or was a one off sale, only time will tell. If, as Mr King contends, it

indicates an increase in unimproved value, that is a matter for the

Commissioner’s assessment as at 1 January 2017. It would be inappropriate to

rely on the sale to retrospectively validate a previously calculated unimproved

value.

113. In that respect, I note the caution expressed in Brisbane City Council v Mio Art

Pty Ltd & Anor,24 a judgment of the Queensland Court of Appeal. Fryberg J

(with whom McMurdo P and Fraser JA agreed) referred to an earlier decision of

the NSW Court of Appeal in which Hope JA wrote that evidence of future

events was admissible not to prove a hindsight, but to confirm a foresight.25

Fryberg J wrote:26

The meaning of that catchy dictum is unclear. So is its logic. For direct proof of market value, it were an aphorism best forgotten. The lack of

22 Inez Investments Pty Ltd v JL Dodd (1979) 28 The Valuer 501, 505 [Carmichael J]

23 Transcript of proceedings page 27224 Brisbane City Council v Mio Art Pty Ltd & Anor [2011] QCA 23425 Housing Commission of NSW v Falconer [1981] 1 NSWLR 547, 55826 Brisbane City Council v Mio Art Pty Ltd & Anor [2011] QCA 234 at

[78], [79]

32

clarity is hardly surprising. The Spencer test postulates hypothetical parties in full possession of knowledge generally available on the date of acquisition. That knowledge includes knowledge of future possibilities, but only as possibilities, and with the weight which prudent persons would ascribe to them. It is difficult to imagine how the fact that a possibility subsequently becomes a reality could be directly relevant to that knowledge.

I see no inconsistency between this approach and that which enables subsequent sales to be taken into account in assessing market price. Those sales are not taken into account as matters which would be present in the minds of the hypothetical parties. They are simply evidence of an event from which an inference can be drawn about the position at an earlier (but not very much earlier) time. The implicit assumption is that nothing material has changed in the meantime or that if it has, allowance can be made from the change. Consequently they are probative of the earlier position. … But it would still be necessary to prove what would have been known by the hypothetical vendor and purchaser.

114. For the purposes of this case, the Tribunal cannot ascertain what (if anything)

would have been known by the hypothetical vendor and purchaser at 1 January

2016 about the possible sale of the subject land (let alone its unimproved value)

in May 2017.

115. 34 and 36 Mort Street: In the MAS Report, Mr McCann also referred to the

sale in June 2017 of the property at 34 and 36 Mort Street after tender for

$11,500,000. Again he noted the rental revenue from existing improvements,

and contended that the improvements add value to the property.

116. Mr McCann said that he had spoken to the purchaser who indicated there were

no immediate plans for redevelopment in a five to 10 year period. Mr McCann

did not do an unimproved value analysis because the sale was “well and truly

out of the frame box” of when the Valuation Office was doing the January 2016

valuation. He did not think the sale was relevant other than to demonstrate that

the market “is still humming along.”

117. Mr King noted that those two blocks have a combined area of 3,062 square

metres, with a total building area of 1,904 square metres and a purpose clause

maximum GFA of 3,062 square metres. A heritage listed building of two levels

occupies the north-east corner of Block 1, with a restaurant and a car yard

occupying the balance of the site. Block 2 comprises a single level stand-alone

building with retail shops and an auto workshop at the rear. According to Mr

33

King, the improvements range from poor to average condition and are of limited

value to the site. There are eight registered subleases with an average lease

expiry of almost two years. He was advised by the property manager that all

subleases are subject to demolition clauses with a six months’ notice period to

vacate.

118. Mr King stated that his enquiries indicated that most of the interest in the

property came from property developers active in the ACT, and the property is

held as a redevelopment opportunity.

119. When comparing the features of that property with the subject land, Mr King

noted that the sale property is larger than the subject property and part of it is

subject to a Heritage listing. The residential opportunity available under the

Crown Lease is limited to the first level. Any expansion of this use would incur

a LVC. In Mr King’s opinion, the price represents a “strong uplift in values for

development sites in Braddon.” (Exhibit G page 15).

120. Mr King said that he included this sale because there were no sales after 2014.

Consequently there was a two year period where unimproved values were

assessed without the benefit of approximate sales. He considered the sale of the

subject land “a good bookend in terms of the completion of analysis to have a

look at what was trending to that area over that entire period.”

121. Again it is inappropriate to have regard to the sale in June 2017. That sale did

not and could not have influenced the determination of the unimproved value of

the subject land. In addition, there are significant differences between the sale

property and the subject land. Too many adjustments would need to be made

when analysing the sale, making it difficult to determine the unimproved value

of the subject land by reference to the sale price of the improved property.

The remaining sales between 2008 and 2014

122. Five sales remain to be considered, three in Mort Street and two in Lonsdale

Street. Although those sales properties are more comparable to the subject land

than the Torrens Street properties, they need to be analysed carefully for the

purpose of estimating the unimproved value of the subject land in each of the

relevant years.

34

123. To summarise the approach outlined earlier in these reasons, based on the

valuation evidence overall, I have concluded that it is safe to analyse those five

sales on the following basis:

(a) all properties were purchased for development purposes, rather than for

the purpose of obtaining investment income;

(b) although some improvements were retained for a period before demolition

and redevelopment, a hypothetical prudent purchaser would consider that

the highest and best use of each parcel is for mixed commercial and

residential use;

(c) the timing of redevelopment depended (or depends) on the circumstances

of individual purchasers and is not relevant in this exercise;

(d) any income from retained improvements did (or does) no more than offset

holding costs and the CUC or LVC which must be incurred to change the

purpose clause in each Crown lease so that the highest and best use of the

land can be achieved;

(e) although a prudent purchaser would know that there will be a charge if the

property’s highest and best use is to be achieved, they would not know (or

be able to estimate with any certainty) the amount of the charge for each

property;

(f) because of that uncertainty, it is not appropriate to adjust the sale price for

an anticipated CUC or LVC;

(g) because several developments in the Braddon precinct have been able to

achieve plot ratios at or near 4:1, it can no longer be said that a plot ratio

of 3:1 is the highest and best achievable use. Consequently, it is not

appropriate to rely on a GFA based on 3:1 simply because there is

certainty that it can be achieved, as the appropriate valuation method;

(h) although several of the sales referred to in this case were also relied upon

in earlier Tribunal cases and findings made in respect of their analyses,

the findings of fact by Tribunal members in those cases were based on the

35

evidence before them and cannot influence (let alone be binding on) this

Tribunal.27

124. Sale 1, 27 Lonsdale Street: Block 14 Section 20 Braddon has an area of 1,252

square metres and is zoned CZ3 (the same area and zoning as the subject land).

It was sold in August 2008 for $4,300,000.

125. The property was purchased by a major property developer (Bulum) who owned

the adjoining property on each side and wanted to buy the middle block to

create a consolidated redevelopment site. Mr King allowed five per cent for

adjoining owner influence on the sale price, while Mr McCann allowed 10 per

cent as a discount for the premium paid by the adjoining owner. He had allowed

five per cent in the Junstamp case, but said he had changed his mind since then,

apparently as a result of conversations with the purchaser.

126. Mr McCann said that he struggled with the premium or extra price that might

have been paid by the purchaser to obtain the middle block. He had made other

adjustments for rental and demolition (which, in his view at the time of the

hearing, were revenue neutral).28 In his opinion, the site was purchased for lease

variation. He had been informed that the LVC was less than $100,000 and

should have been added back into his calculations. On his analysis the land was

valued at $3,091 per square metre.

127. In Giusida Pty Ltd v Commissioner for ACT Revenue, Refshauge ACJ described

the question of the appropriate deduction for adjoining influence as a “vexed

matter” and “not an easy matter to resolve.”29 He referred to authorities to the

effect that, although such a sale need not be excluded from consideration as a

comparable sale, it needs to be “viewed with caution” and “carefully

analysed.”30 Refshauge ACJ noted that, in the case before him on appeal, both

27 See the criticism by Refshauge ACJ in Giusida Pty Ltd v Commissioner for ACT Revenue [2016] ACTSC 275 of the danger of even “passing observations” elevating findings of fact to the force of propositions of law

28 Mr McCann volunteered that this conclusion was the product of hindsight, having regard to the rental income derived from the property (Transcript of proceedings pages 149-151).

29 Giusida Pty Ltd v Commissioner for ACT Revenue [2016] ACTSC 275 at [84]

30 Western Australian Planning Commission v Arcus Shopfitters Pty Ltd [2003] WASCA 295 at [55]-[58] and cases cited therein

36

valuers agreed that an allowance must be made for the special interest of an

adjoining owner. In the absence of adequate evidence, it becomes a matter of

discretion for the Tribunal. His Honour noted that a judge of facts is not

required to accept the unchallenged evidence of an expert if there is a rational

basis on which it is to be rejected.31

128. The sale land and adjoining parcels were redeveloped. Mr McCann considered

that, although the purchaser had a focus on future redevelopment, there was no

hurry. In the years between the sale date and the redevelopment, the purchaser

obtained rent from the building adapted for another purpose. Mr McCann stated

that the receipt of rent indicated the added value of the improvements (Exhibit F

page 8).

129. Although a general proposition, a sale to an adjoining owner need not be

excluded from evidence of value, its price might reflect the special value to the

purchaser rather than the market value. The evidence in this case supports such

a finding. The issue is how much above market value the purchaser was willing

to pay to ensure that he would acquire the property. Both valuers considered

that some allowance should be made. Mr McCann expressly struggled to

establish that amount. I am not convinced that his estimate, without more

evidence, is sufficient to support a 10 per cent allowance. I accept that some

allowance is appropriate, and adopt five per cent.

130. Mr McCann noted that the sale was during the period of the global financial

crisis in 2008. He criticised Mr King for not having regard to the rental stream,

not allowing enough for adjoining owner influence, and not allowing for

betterment.

131. Mr King said that he had used some of the information in the sale analysis in the

Junstamp case where demolition and sale to the adjoining owner was part of the

analysis. He described the sale land as comparable to the subject land in the

sense that it provided a “lower indicative” value, being a commercial property.

He had analysed it for commercial purposes only, not its residential potential.

31 Giusida Pty Ltd v Commissioner for ACT Revenue [2016] ACTSC 275 at [87]-[89]

37

132. Both valuers allowed the addition of $150,000 for demolition costs, but nothing

for CUC.

133. However, in his oral evidence, Mr McCann said that it would be reasonable to

assume that the CUC would be between $75,000 and $100,000. He said he had

been informed that the amount was less than $100,000 and should have been

added back into his calculations.32 But Mr King said that it is very difficult at

the point of sale to establish what the CUC or LVC would be. He had excluded

it from his analysis because the determination might not happen until many

years after the sale.

134. As noted earlier, I am not convinced that a sufficiently precise amount could be

ascertained for the CUC or LVC at the time of purchase to allow it to form a

meaningful component of the analysis of unimproved land value.

135. Having regard to all the evidence, I have concluded that the adjusted analysis of

the sale is:

Sale price $4,300,000

Less adjoining owner influence 5% $215,000

Add demolition cost $150,000

$4,235,000

Area 1,252 square metres $3,382 per square metre site area

136. Given the similarity of the sale block and the subject land in area and other key

features, that amount provides a useful guide to the unimproved value of the

subject land.

137. Sale 2, 28 Mort Street: Block 5 Section 28 Braddon has an area of 1,517

square metres and is zoned CZ3. It was sold for $5,000,000 in July 2010

(McCann) or March 2011 (King) and proceeded directly to redevelopment;

138. Both valuers added $100,000 for demolition. Mr McCann also added $500,000

for CUC and, on that basis, analysed the value of the land at $3,653 per square

metre. However, consistently with his approach to all the sales in the present

32 The decision in the Junstamp case was that the CUC was $287,500 to allow a mixed use on these blocks. The amount of CUC attributable to the sale block was one third of that amount, $95,833

38

case, Mr King did not allow for any CUC or LVC, as the objective prudent

purchaser would not have known the amount of the charge at time of contract.

139. Mr King analysed the sale at $3,362 per square metre of site area before the

addition of residential and other uses (or $1,681 per square metre GFA based on

a 2:1 plot ratio).

140. Mr McCann noted that the same purpose clause applied to the sale land and the

subject land, and the developer wanted to get on with redevelopment that

included commercial on the ground floor, sub-commercial on the first floor, and

residential development.

141. Having regard to all the evidence, I have concluded that the adjusted analysis of

the sale is:

Sale price $5,000,000

Add demolition $100,000

$5,100,000

Area 1,517 square metres $3,362 per square metre site area

142. The sale land is about 20 per cent larger than area of subject land. The analyses

of this sale land and the previous sales show a fairly consistent site area rate per

square metre of approaching $3,400 between August 2008 and July 2010.

143. Sale 3, 32 Mort Street: Block 3 Section 28 Braddon has an area of 1,530

square metres and is zoned CZ3. It was sold in October 2013 for $5,000,000, to

a major developer (Bulum). It did not proceed directly to development and some

income was derived from improvements on the land, but at the date of hearing

the improvements had been demolished.

144. Mr McCann said that the LVC for this property was equal to the allowance for

an environmental clean-up. He added $525,000 to the sale price as an estimate

of contamination clean-up costs. His analysis, on the basis that the land could be

used for residential development, was for $3,611 per square metre for a site area

of 1,530 square metres. He made no allowance for demolition because a car

rental company was renting the land for a couple of years for a total amount in

excess of $100,000, so he treated that as revenue neutral.

39

145. Mr King said his assessment was based on commercial use only, and that use

might include contamination of the site. Consequently, there would be no need

to improve the condition of the site. If the use were to change to residential, then

it would be necessary to consider remediation of the site in order to access the

residential component. In other words, he had not made an adjustment to treat

the site as a mixed use commercial and residential site. He did not include any

of the charges associated with the lease variation that might occur on that site. If

he were to vary the site to add residential, he would need to add in the LVC.

Having not made any adjustment in his analysis for potential residential use, he

described this commercial site as setting “the lower indicative price that might

be applied to the subject property.”

146. The sale land is about 20 per cent larger than the area of the subject land. I

accept that at the time of sale was used for commercial purposes only.

Conversion to residential uses would involve costs associated with both

remediation and variation of the Crown lease. Those costs could not be

estimated with precision at the time of sale. In any case, it could not be assumed

that the land was purchased for residential purposes. Accordingly, rather than

trying to estimate a range of traditional and imprecise cost for conversion to

another purpose, I proceed on the basis that the sale price should be analysed by

reference to those commercial purposes rather than the uses to which the subject

land could be put. On that basis, the unimproved value of subject land would

have been a higher rate per square metre.

147. Having regard to all the evidence I have concluded that the adjusted analysis of

the sale is:

Sale price $5,000,000

Add demolition $100,000

$5,100,000

Area 1,530 square metres $3,333 per square metre site area

148. Sale 4, 16 Lonsdale Street: Block 19 Section 29 Braddon has an area 1,254

square metres and is zoned CZ3. It was sold in December 2013 for $4,825,000

to Bulum, the major property developer who purchased sale properties 1 and 3.

40

149. There seems to be no doubt that the developer purchased this property for

redevelopment and not for investment income, and that the developer is

landbanking it until the time is right for development. The MAS Report states

that while Sale 5 (40 Mort Street, considered below) moved directly to

redevelopment, the Bulum purchaser realised rental income during the holding

period prior to demolition, and Sale 4 was still earning rental income (Exhibit F

page 9).

150. Mr McCann had not allowed a LVC because that had not been determined,

although the expectation was that the LVC would be $250,000. He described

the sale as “setting the lower base by not having the variation.” The purchaser

had a “high expectation” for development of the site which was “pregnant with

future use.” That was reflected in the purchase price. The GFA had recently

been concluded at 4:1.

151. An additional complication in relation to this sale was determining the added

value of improvements, which were converted for use as food outlets which

continued to be used as such at the date of the hearing. Mr McCann allowed

$500,000 for improvements having regard to the leasing information he had

been given for a period of three to four years. He described the rents as

“significant” and, although the improvements themselves were not of great

significance they had been adapted easily and at low cost. He considered the

improvements more valuable than Mr King considered them to be.

152. Mr King’s estimate of $225,000 was reached “via negotiation” by agreement

with a Savill’s valuer who applied a rental basis to derive the value of the

improvements (which included “fairly low grade improvements that existed on

the site at the time” such as an awning, hard stand and offices, but not the

caravan).

153. In the circumstances, Mr McCann’s estimate of $500,000 for improvements

seems excessive. Mr King’s estimate of $225,000 is to be preferred, although it

is a departure from his usual practice of adding only $100,000 for demolition.

154. Having regard to all the evidence, I have concluded that the adjusted analysis of

the sale is:

41

Sale price $4,825,000

Less value of improvements $225,000

$4,600,000

Area 1,254 square metres $3,668 per square metre site area

155. The sale price was a little lower than the price paid for larger blocks and

indicates the price a prudent developer would pay for a development property

with higher use potential in the future.

156. The sale property has the same area as the subject land. By comparison, the

subject has more immediate potential, as the Crown lease purpose clause was

varied to include residential use. Consequently, the subject land would have a

higher rate per square metre.

157. Sale 5, 40 Mort Street: Block 8 Section 20 Braddon has an area of 1,533

square metres and is zoned CZ3. It was sold in either August 2014 (King) or

October 2014 (McCann), for $5,100,000. The improvements were demolished

and the purchaser proceeded directly to development. Mr King added $100,000

for demolition.

158. Mr McCann added $500,000 for LVC and environmental charge, which Mr

King said had not been agreed.

159. At the hearing, Mr McCann noted that apparently the lease variation had not

been finalised and the LVC had not been settled. He had been advised by the

purchaser that they expected a demolition cost of about $100,000 and a LVC in

the order of $350,000 and “some new thing about the environmental offset”

which supported his total allowance of $500,000. He noted that the property had

a high plot ratio of 4.4:1 which was achieved after purchase. Mr McCann was

quite clear in his opinion evidence that the price paid in the marketplace was for

the lease variation, not for the existing lease or the commercial component. He

analysed the value of the land as $3,653 per square metre.

160. Mr King said that he had analysed the site back to a “nice, clean site with

commercial only in the purpose clause,” and so he had only added the cost of

demolition. Again, he differed from Mr McCann in not making any adjustment

for the CUC or possible environmental costs. He also noted that a “much

42

smaller GFA” was associated with the planning application with the site before

it was resold. He stated that it can be very difficult to ascertain what a charge

would be based on a “moving target of GFAs” and hence what the real

valuation associated with that difference would be, in order to arrive at a site

with “residential” in the purpose clause. Although he acknowledged that valuers

try to make adjustments where they have sufficient information, he called into

question reliance on conversations with developers who specify figures that

have not yet been agreed. In the case of the sale block, the development that had

been approved had not been registered on the title at the date of the hearing.

161. In keeping with the approach I have adopted for the adjusted analyses of these

sales, the betterment and environmental charges have been excluded for this

exercise.

162. Having regard to all the evidence, I have concluded that the adjusted analysis of

the sale is:

Sale price $5,100,000

Add demolition $100,000

$5,200,000

Area 1,533 square metres $3,392 per square metre site area

163. The sale land is larger than the subject land. The price was consistent with

similar sized blocks. The analysis does not indicate any increase in value on a

rate per square metre basis. The price might reflect the anticipated cost of

gaining approvals for development of the site.

Summary of relevant sales

164. The analysis of the evidence considered above can be summarised as follows:

(a) Sale 1 August 2008 1,252m2 sale price $4,300,000

Adjusted analysis $4,235,000 $3,382 per m2

(b) Sale 2 July 2010 1,517 m2 sale price $5,000,000

Adjusted analysis $5,100,000 $3,362 per m2

(c) Sale 3 August 2013 1,530 m2 sale price $5,000,000

Adjusted analysis $5,100,000 $3,333 per m2

43

(d) Sale 4 October 2013 1,254 m2 sale price $4,825,000

Adjusted analysis $4,600,000 $3,668 per m2

(e) Sale 5 August 2014 1,533 m2 sale price $5,100,000

Adjusted analysis $5,200,000 $3,392 per m2

General observations about the five sales between 2008 and 2014

165. Those five sales between 2008 and 2014 (with no sales for about three years

from July 2010 until October 2013), demonstrate a consistency in the prices

paid for each site, allowing that smaller sites (with the same area as the subject

land) attracted a lower price than the slightly larger blocks. As noted earlier,

there were no sales after October 2014 that are relevant for this exercise.

166. If the sales in Torrens Street are put to one side, the two Lonsdale Street sales

with areas of about 1,254 square metres, sold for $4,300,000 in 2008 (No 27)

and $4,825,000 in 2013 (No 16), slightly less than the three Mort Street sales,

with areas of between 1,517 and 1,532 square metres, which sold for $5,000,000

in 2011 (No 28) and also in 2013 (No 32), and $5,100,000 in 2014 (No 40).

167. On face value, this would seem to indicate that the smaller sites are of

marginally less value than the larger sites and that there was a slight increase in

site value from 2008 levels.

168. For reasons given earlier, the only adjustment required to sale price in each case

would be the addition of demolition costs, say $100,000 to $200,000.

Conclusions about the unimproved value of the subject land for relevant years

169. For the reasons set out above, and based on the assumptions and analyses of the

five comparable sales on a rate per square metre of site area, the following

unimproved values would seem appropriate:

(a) as at 1 January 2011, with the variation of Crown lease not registered until

November 2011, and hence limited potential for development, apply

$3,400 per square metre for unimproved value of $4,263,600, rounded to

$4,300,000;

(b) as at 1 January 2012, with the variation of Crown lease registered and

CUC determined, the property has an advantage over sales where

44

betterment charges were not determined, also adjust for size against Sales

3 and 5, apply $3,800 per square metre for unimproved value of

$4,765,000, rounded to $4,800,000;

(c) as at 1 January 2012 to 1 January 2016, sales do not indicate any

significant change in unimproved value in that period, apply $3,800 per

square metre for unimproved value of $4,765,000, rounded to $4,800,000.

170. It follows that, apart from unimproved value as at 1 January 2011, Mr King’s

unimproved values of $4,800,000 for the years 2012 to 2016 are reasonable if

the advantage enjoyed by the subject land is considered. Accordingly, the

unimproved values determined by the Commissioner for the years 2012-2016

should be confirmed.

Exercise of Commissioner’s discretionary power to reassess tax liability

171. Having decided that:

(a) the unimproved value of the subject land in each year from 2011 to 2016

was more than the amount stated in the original notices issued for each of

those years; and

(b) the Commissioner was empowered to issue redeterminations of

unimproved value in respect of the subject land for the years following the

variation of the Crown lease in 2011;

the question for this Tribunal is whether the Commissioner’s decision to make a

reassessment of FANDS’ tax liability for each of the relevant years 2011 to

2016 should be:

(a) confirmed; or

(b) varied; or

(c) set aside and either:

(i) a substitute decision be made by the Tribunal; or

(ii) the matter be remitted to the Commissioner for reconsideration in

accordance with any direction or recommendation of the Tribunal.33

33 ACT Civil and Administrative Tribunal Act 2008 section 68(3)

45

172. That question must be answered by reference to the applicable statutory

provisions and the evidence before the Tribunal.

Statutory provisions about the Commissioner’s power to reassess tax liability

173. Relevant sections of the Rates Act 2004 are referred to earlier in these reasons

for decision.34 Those sections include the obligations on the Commissioner to

determine the unimproved value of a parcel of rateable land for each financial

year (sections 9 and 10), and the power of the Commissioner to redetermine the

unimproved value of a parcel of land if an error was made in relation to a

determination of the unimproved value of that land in a particular year (section

11) or if a ‘change of circumstances happens in relation to a parcel of land that

affects the unimproved value’ of it (section 11A).

174. A change to the Crown lease of the purpose for which the subject land may be

used (for example, by the inclusion of the new purpose of ‘residential use’) is a

‘change of circumstances’ which would have affected the unimproved value of

the land.35

175. The Commissioner did not contend that an error had been made in relation to

the determination of the unimproved value of the subject land. Rather, the

Commissioner relied on section 11A to redetermine the unimproved value of the

subject land.

176. Sections 7 and 9 of the Taxation Administration Act 1999 empower the

Commissioner to make an assessment, and one or more reassessments, of the

tax liability of a taxpayer. The relevant parts of those sections provide as

follows:

Part 3 Assessment of tax liability

7 General power to make assessment

(1) The commissioner may make an assessment of the tax liability of a taxpayer.

(2) An assessment of a tax liability may—

…34 See paragraphs [36] to [38]35 Giusida Pty Ltd v Commissioner for ACT Revenue [2016] ACTSC 275

at [13]

46

(a) include an assessment of the value of anything for the purpose of assessing tax liability.

…

9 Reassessment

(1) The commissioner may make 1 or more reassessments of a tax liability of a taxpayer.

(2) A reassessment of a tax liability must be made in accordance with the legal interpretations and assessment practices generally applied by the commissioner in relation to matters of that kind at the time the tax liability arose except to the extent that any departure from those interpretations and practices is required by a change in the law (whether legislative or non-legislative) made after that time.

(3) The commissioner must not make a reassessment of a tax liability—

(a) more than 5 years after the initial assessment of the liability, unless—

(i) the purpose of the reassessment is to give effect to a decision on an objection or appeal as to the initial assessment; or

(ii) at the time the initial assessment or a reassessment was made, all the facts and circumstances affecting the liability under the relevant tax law of the person in relation to whom the assessment or reassessment was made were not fully and truly disclosed to the commissioner; and

…

(4) The initial assessment of a tax liability remains the initial assessment of the liability for this Act even if it is withdrawn under section 13. (emphasis added)

177. The Dictionary to the Taxation Administration Act 1999 refers to section 4 for

‘tax laws’ in relation to the ACT. Section 4 provides, in part:

4 Meaning of tax lawFor this Act, each of the following is a tax law:(a) this Act;…(l) the Rates Act 2004;…

47

178. Consequently, the Rates Act 2004 is a relevant tax law for the purpose of section

9(3)(a)(ii) of the Taxation Administration Act 1999.

179. Reference should also be made to sections 10, 11 and 14 of the Tax

Administration Act 1999.

10 Requirement for full and true disclosure of relevant facts and circumstances

(1) A person who is liable to pay tax under a tax law must, before or at the time an assessment of the tax liability is made, fully and truly disclose to the commissioner all the facts and circumstances affecting the tax liability under the relevant tax law.

Maximum penalty: 50 penalty units, imprisonment for 6 months or both.

(2) It is a defence to a charge under this section that the defendant reasonably relied on some other person to ensure that the requirements of this section were satisfied.

11 Information on which assessment is made

(1) The commissioner may make an assessment on the information that the commissioner has from any source at the time the assessment is made.

(2) If the commissioner has insufficient information to make an exact assessment of a tax liability, the commissioner may make an assessment by way of estimate.

14 Notice of assessment, reassessment or withdrawal of assessment

…

(3) If the commissioner makes a reassessment, the commissioner must issue a notice of assessment, showing the amount of the reassessment and the amount by which the assessment has been increased or decreased.

Evidence to provide context for the exercise of the Commissioner’s power to reassess tax liability

180. To decide whether the Commissioner properly exercised his discretionary

power in relation to the reassessment of tax liability for the subject land for each

year from 2011 to 2016 it is useful to understand three series of events:

(a) the steps leading to the change of the Crown lease of the subject land and

the change in statutory responsibility in relation to CUCs and LVCs;

48

(b) the change to the body responsible from time to time for assessing the

unimproved value of land in the ACT; and

(c) the steps taken to revalue land in Braddon.

Chronology of the change to the Crown lease of the subject land and the statutory responsibility for determining CUC and LVC

181. The steps concerning change of the Crown lease of the subject land, and the

applicable statutory provisions at material times, are set out in detail in the

Commissioner’s written submissions on determining CUCs. The following

summary draws on that submission and evidence before the Tribunal.36

(a) On 28 March 2008, FANDS applied to the ACTPLA seeking a variation

to the Crown lease for the subject land.

(b) The application was made under the Land (Planning and Environment)

Act 1991 (LPE Act).

(c) On 31 March 2008, the LPE Act was effectively repealed by the Planning

and Development Act 2007 (PD Act). The transitional provisions of the

PD Act provided that if a person had previously applied for approval

under the repealed LPE Act and the ACTPLA had not decided the

application, the LPE Act continued to apply in relation to the application,

and any approval was taken to be a development approval under the PD

Act.

(d) On 22 September 2008, the ACTPLA approved the application under the

LPE Act with conditions pursuant to that Act, and the approval became a

development approval for the purposes of the PD Act.

(e) Between 22 September 2008 and 30 June 2011, sections 276 and 277 of

the PD Act provided that the ACTPLA must not execute a variation of a

lease unless the lessee had paid the Territory any CUC worked out by the

ACTPLA by reference to a statutory formula: CUC = (V1-V2) x 75%.

(f) On 24 January 2011, ACTPLA worked out the CUC payable by FANDS

as: $283,500 = ($5,763,000 - $5,385,000) x 75%.

36 See paragraphs [15]-[27] above

49

(g) On 3 May 2011, FANDS applied to the Tribunal for a review of the

ACTPLA’s decision regarding the CUC under section 277 of the PD Act.

The parties to the proceeding were FANDS and the ACTPLA.

(h) On 1 July 2011, the PD Act was amended by the Planning and

Development (Lease Variation Charge) Amendment Act 2011 (the 2011

PD Act Amendments).

(i) The effects of the 2011 PD Act Amendments were:

(i) a new LVC scheme replaced the CUC regime;

(ii) the LVC was either determined by the Treasury or worked out by

the Commissioner under the PD Act;

(iii) the Commissioner was required to issue a notice of announcement

of the LVC to the lessee or the applicant for a development

application;

(iv) the Commissioner did not take into account improvements when

working out the LVC;

(v) the LVC was subject to reconsideration by the Commissioner on

application;

(vi) Division 9.6.3 of the PD Act became a ‘tax law’ for the purposes of

the Taxation Administration Act 1999.

(j) On 1 July 2011, the Commissioner delegated to ACTPLA the powers

conferred under Division 9.6.3 of the PD Act following the 2011

amendments.

(k) When the 2011 PD Act Amendments commenced, Chapter 17 of the PD

Act provided that if a development application was made before 1 July

2011 that included an application to vary a nominal rent lease and the

ACTPLA had not worked out a CUC for the variation, Division 9.6.3

continued to apply as if the 2011 PD Act Amendments had not

commenced (unless the applicant applied in writing to the Commissioner

requesting that the application be dealt with as if it had been made after 1

July 2011).

50

(l) The transitional provision in section 471 of the PD Act did not apply in

relation to the FANDS application because ACTPLA had worked out the

CUC for the variation before 1 July 2011.

(m) Section 84 of the Legislation Act 2001 saves the operation of repealed and

amended laws in relation to specified circumstances, and there is nothing

in the transitional arrangements in section 471 of the PD Act to suggest

that it was intended to displace section 84 for a CUC worked out before 1

July 2011.

(n) The making of a CUC decision gave rise to an entitlement to review by

the Tribunal, contingent on making an application to the Tribunal.

(o) The Commissioner was never a party to the Tribunal proceedings, was

never substituted as a party, and would not have any reason to be a party

or to participate in the proceedings given that it related to a CUC (in

relation to which the Commissioner had no statutory power) and not an

LVC.

(p) On 21 July 2011, by consent of FANDS and the ACTPLA, the Tribunal

made orders in terms of the agreement signed by FANDS and the

ACTPLA setting aside ACTPLA’s decision regarding the CUC and

substituting it with a decision determining the CUC as $50,250

($5,452,000 - $5,385,000 x 75%).

(q) On 6 October 2011, ACTPLA applied to the Registrar-General of the

Land Titles Office to register the variation of FANDS’s Crown lease.

(r) On 2 November 2011, the Registrar-General registered the variation of the

Crown lease.

182. The notice of assessment dated 6 September 2016 advised FANDS that the date

of redetermination of unimproved values was 5 September 2016 and the date

from which these values applied for rating purposes was 6 October 2011.

Chronology of allocation of responsibilities for determining unimproved value of ACT land

183. Mr King gave evidence about the process by which valuations of ACT

properties are made, including who makes decisions about the unimproved

value of land and the CUC or LVC that applies where there was a change of use

51

or lease variation that affected the value of the land. That evidence included an

overview of the role of the Australian Valuation Office (AVO) until 30 June

2014, and the ACT Valuation Office (ACTVO) from 1 July 2014. The

following paragraphs draw on that evidence.

184. Mr King began working with the AVO in Canberra in 2005. He managed the

office and carried out valuations. In 2009, he was promoted to General Manager

of the AVO and performed a range of functions including exercising

responsibility for ACT valuations. There was:

(a) a deed of arrangement with the Commissioner for the AVO to provide

unimproved valuations for rating purposes, including when an objection

was lodged; and

(b) a similar arrangement with the ACTPLA for the AVO to produce

valuations for the ACTPLA’s purposes in relation to development

applications and the calculation of CUCs. That work involved critiquing

the valuation and other material submitted in relation to a development

application.

185. A valuation before 30 June 2011 was conducted by the AVO on instructions

from either the Commissioner or the ACTPLA. The AVO had no independent

function of conducting valuations in the ACT. Officers of the AVO had no

delegation to make decisions about CUCs and unimproved values of land.

186. Although the statutory responsibility for LVCs was with the Commissioner

from 1 July 2011, the system for conducting valuations of ACT property did not

change. It was still the case that, after that date, nobody in the AVO held the

delegation from the Commissioner to make a decision about the unimproved

value of land or LVCs.

187. The ACTVO commenced three years later, on 1 July 2014, and replaced the

AVO for those purposes. It was, and remains, part of the ACT Revenue

Office.37 Most of the files relating to ACT leases went to the ACTVO. Mr King

is senior manager of that office. He reports to the Under Treasurer through the

37 The ACTVO is accommodated within the Revenue Management Division of the Chief Minister, Treasury and Economic Development Directorate

52

Commissioner.38 He takes direction from the Commissioner, including about

when the Commissioner wants valuation work produced. The system remains

the same as previously. Valuations are conducted on instruction from either the

Commissioner (in relation to any change of any lease variation being registered)

or the ACTPLA (in relation to lease variations to value the ‘before’ and ‘after’

values so that the LVC can be worked out). The ACTVO does not have any

independent function or responsibility for conducting valuations of ACT

property.

188. In summary, the consecutive relationships between the AVO or ACTVO and

the Commissioner and the ACTPLA have three key features:

(a) the AVO was, and the ACTVO is, a separate entity from the

Commissioner and the ACTPLA;

(b) the AVO provided, and the ACTVO provides, valuation advice when

requested by the Commissioner and the ACTPLA rather than carrying out

valuations on its own initiative; and

(c) the AVO was not, and the ACTVO is not, the decision-maker.

189. At the time of the hearing, there were four valuers in the ACTVO (including

Mr King and Mr Geoff McInerney) together with other staff. A larger number

of valuers (approximately 15) had worked in the AVO in earlier years, carrying

out valuations of land in the ACT and the Northern Territory. According to Mr

King, Mr McInerney joined the AVO in about 2009 and carried out ACT

valuation work. Mr McInerney was involved in the reassessment of the value of

blocks in Braddon including the Junstamp property in 2010 to 2011 and he

would have carried out LVC work around 2013.

190. Mr McInerney did not give evidence in these proceedings.

Determination and redetermination of unimproved value of the subject land

191. Mr King gave evidence that the original valuations of the subject land from

2009 to 2016 would have been part of a standard mass appraisal process

employed across the whole of the ACT. He stated that, once the block was

assessed in 2009, it would have been subject to that process, which gave some

38 The Commissioner also is the Executive Director of the Revenue Management Division

53

consideration to general trends for the data set of commercial properties such as

CZ zoned properties in the ACT (rather than just in Braddon). If the relevant

Valuation Office were to be notified of a variation to a lease, that might lead to

a revision of the valuation of that property.

192. A review of an area would relate to an issue identified in the rating values in

that area, where the area seemed to be out of line or there was a dispute in

relation to a property that might prompt a review of a suburb or precinct.

193. Mr King said that the “standard process” after the registration of a change of use

was for the Valuation Office to receive an email alerting it to the change and

asking it to consider the valuation in relation to that change. A Crown lease

could not be varied unless the CUC or LVC was paid first. As noted above, the

ACTPLA would issue the instructions to initiate the assessment of the “before”

and “after” valuations so the CUC or LVC could be calculated. In a practice that

has operated for some time, the valuer’s role is to review the applicant’s

valuer’s valuation.

194. According to Mr King, the first lease in Braddon to be varied to include

residential use would have been in at least 2010, if not earlier.

195. In a letter to the ACAT dated 19 May 2011 (Exhibit W), Mr Flannery, on behalf

of FANDS, referred to “a number of applications in Braddon that we are

involved with including this one”, and a request to ACTPLA on 22 March 2011

for the determination of the CUC in relation to the application about the subject

land and three other applications.

196. During the period under consideration in this case, the value of commercial

properties in the Braddon area moved differently from other commercial areas

of the ACT. That difference was not identified until the 2016 case involving

Hosmer Holdings Pty Ltd (Hosmer Holdings) and the Commissioner.

197. Mr King gave evidence about a general review of valuations of land in Braddon

from late 2016 into 2017 when it was completed. He had conducted a full

review of the area and, in his opinion, had identified all the variations to Crown

leases within the Braddon precinct. He had discussions with Hosmer Holdings

in relation to its property and that dispute was mediated by the Tribunal in 2016.

54

In late 2016, having identified some issues, he notified the Revenue Office and

suggested that a review of the area should be undertaken in 2017. Mr King

thought his suggestion about a need for such a review would have been to the

Commissioner. There was no instruction from the Commissioner, but there was

a discussion with the Commissioner in relation to reviews that needed to be

undertaken in the area. Following that discussion, “we decided to undertake

work in Braddon in order to reflect what had occurred in that market recently.”

198. According to Mr King, his review was not a result of the email dated

23 September 2016 (discussed below at [205]-[207]). He was unaware of any

previous review on that scale, at least back to 2013-2014 when he started

making unimproved value assessments, as did other valuers in that office.

199. Although there was evidence of the general review of valuation of land in

Braddon, there is little evidence before the Tribunal about the process leading to

the decision to redetermine the unimproved value of the subject land in

September 2016.

200. On 16 August 2016, the Commissioner issued a rates assessment notice for the

year 1 July 2016 to 30 June 2017, based on an unimproved value of $1,678,000,

the same amount as for the immediately preceding three years.

201. The earliest documentary evidence in relation to a possible redetermination of

the unimproved value (Exhibit P) comprises an email exchange on Friday 26

August 2016 between Mr McInerney (Senior Valuer, ACTVO) and Gerry

Bustamante (Assistant Manager, Property Payroll and Debt, ACT Revenue

Office).

202. It seems that at 9:18 am that day, Mr McInerney received by email information

about 1769686-2-AVCL (application to vary the Crown lease of the subject

land). There was no evidence as to why he received that information at that time

on that date. At 9.20 am, Mr McInerney wrote to Mr Bustamante (cc Mr King):

Gerry,

The Crown Lease for Block 15 Section 28 Braddon was varied to include

residential use in 2011 (see attached) the UV needs to be revised due to

this variation.

55

At 9.48 am, Mr Bustamante wrote to Mr McInerney:

Hi Geoff

Do you need us to send you a request to amend the UVs or would you

automatically amend the values as a result of the lease variation?

At 9:55 am, Mr McInerney wrote to Mr Bustamante:

Gerry

We need you to officially request an amendment

At 1:52 pm, Mr Bustamante wrote to Mr McInerney (cc Valuations, and Loan

Nguyen)

Hi Geoff,

Could you please arrange for a new revaluation to be done from 1

January 2009 to current on Block 15 Section 28 Braddon as a result of

the Variation of the Crown Lease. See attached.

The new PC is 99 (commercial and residential purposes)

203. The email exchange on 26 August 2016 is consistent with the respective roles of

the ACTVO and ACT Revenue Office outlined above. Mr King described that

email exchange as relating to an official instruction to carry out a valuation in

relation to an amendment to the Crown lease of the subject land.

204. By notice dated 6 September 2016, FANDS was advised of the redetermination

of the unimproved values.

205. On 23 September 2016, the Commissioner sent the following email message to

Mr King, Mr McInerney, Mr Bustamante and Mr Tonna:

I have just advised the Under Treasurer that there will not be any further adjustments to UVs in Braddon until ACTVO have undertaken a comprehensive review of UV relativities in Braddon.

Could we all ensure that no reassessment are undertaken from now. (Exhibit S)

56

206. The email of 23 September 2016 makes sense in this context if it is seen as

providing a reference to both a broader revaluation of the Braddon area that has

not been completed and a consequential halt to a revaluation of individual

blocks whose change of circumstances had come to the attention of the

Commissioner.

207. It is also consistent with the evidence given by Mr King that the subject land

was not the only block in Lonsdale Street that had been reassessed. He

explained that, before receiving the email, he had been working on sections in

Braddon and had made adjustments to those unimproved values, which were to

be implemented in a 2017 rating release. By the time of that email message,

only FANDS had been notified of a change. Mr King was not aware of any

other section 11A adjustments being issued to other lessees in Braddon.

208. A letter sent by the ACT Revenue Office to property owners in Braddon dated

6 July 2017 (Annexure E to Exhibit E) referred to the yearly review of ACT

land values that “determined a need for adjustments to some property values in

and around Braddon.” That was the review being undertaken by Mr King. The

letter continued:

Over the past ten years the commercially-zoned precinct of Braddon has transformed from generally low value permitted uses of trade and services, to high-value uses of commercial retail, residential and mixed-use developments.This has significantly increased the market value for properties in Braddon, but in some cases this has not yet been factored into the values that are used to determine ACT property charges.

209. The letter alerted the addressees to the possibility of some change to the next

rates bill because, from 1 July 2017, general rates would be assessed using

revised and updated property values.

Submissions about the exercise of the Commissioner’s power to reassess tax liability

Applicant’s submissions

210. There are two main limbs to the FANDS submission.

211. First, FANDS submits, in summary, that:

57

(a) under section 6 of the Rates Act 2004, the Commissioner’s task is to value

the lease of the rateable land;

(b) between 2011 and 2016, the Commissioner failed to fulfil his statutory

duty in the sense that he did not look (or elected not to look) at the leases

he was required to value; and

(c) the consequences of the Commissioner’s decision should not be visited on

the taxpayer.

212. In support of that submission, FANDS contends that taxpayers are entitled to

assume that the Commissioner will fulfil his statutory duty and look at the

leases he is valuing. Any suggestion that the Commissioner:

(a) did not know that leases get varied and that variations result in a change in

their unimproved value; and

(b) did not know that Braddon was undergoing active redevelopment,

should be rejected.

213. FANDS points to the organisational structure and historical evidence to show

how the process for determination and redetermination occurs. The ACTVO

does valuations for the variations of leases and the valuations for unimproved

value purposes. The ACTVO is within the Commissioner’s office. The manager

of the ACTVO reports to the Under Treasurer through the Commissioner.

214. FANDS refers to Mr King’s evidence that redevelopment has been going on in

Braddon for almost 10 years, and that the ACTVO has done revaluations as a

result of lease purpose clause variations when the variations are on the Register

of Land Titles.

215. FANDS submits that the notion that the Commissioner was blind to variations

to Crown leases and the effect they could have on unimproved value should be

rejected. From 1 July 2011, the Commissioner was integrally involved in a

similar process. The terms of the variation to the Crown lease of the subject land

were registered in 2011.

58

216. In his witness statement (Exhibit E paragraph 10), Mr Flannery stated that

Mr McInerney was “substantively involved” for the AVO on behalf of the

ACTPLA in the valuation process leading to the CUC agreement in July 2011.

217. Second, FANDS submits that to receive a backdated rates assessment is unfair

to the taxpayer when the taxpayer was in no way at fault. Such a backdated

assessment materially prejudices budgeting, the ability to recover outgoings,

cash flow and financing, and business certainty. Further, when Mr Flannery

sought extra time for FANDS to pay the back rates and taxes, he was told he

would have to pay interest. Senior counsel for FANDS referred to “this most

capricious exercise of power” which he described as “quite appalling.”

218. In response to suggestions that FANDS might have been obliged under section

10 of the Taxation Administration Act 1999 to truly and fully disclosed to the

Commissioner all facts and circumstances affecting its tax liability, senior

counsel for FANDS submitted that there “is absolutely no obligation

whatsoever” on FANDS to advise the Commissioner about the change to its

Crown lease. There is no applicable form or regulation. FANDS submits that

section 10 has no application to this case.

219. Mr Flannery said that he did not notify the Commissioner of the consent order

of the ACAT on 21 July 2011 in relation to the CUC payable for Crown lease

variation. His evidence was that:

(a) he was aware of no reason other than the change to the Crown lease

purpose clause that would have warranted the change in unimproved value

of the subject land; and

(b) he knew of no one from FANDS who provided correspondence advising

the Commissioner of the change to the Crown lease purpose clause.

220. He did not suggest that FANDS relied on some other person to disclose to the

Commission of the change of circumstances.39

221. Rather, Mr Flannery drew on his experience as a valuer to give evidence that he

had never seen instances where an owner of property had advised the rating

39 Taxation Administration Act 1999 section 10(2)

59

authority that the owner had changed the Crown lease purpose clause and had

suggested to the authority that it should adjust the unimproved value of the land.

Respondent’s submissions

222. The Commissioner points to:

(a) the general requirement that the Commissioner administers the Taxation

Administration Act 1999 and other tax laws, including the Rates Act

2004;40

(b) the Commissioner’s discretionary power to do all things that are necessary

or are convenient to give effect to the Taxation Administration Act 1999

and other tax laws;41 and

(c) the specific discretionary power to redetermine the unimproved value of

land if a ‘change of circumstances’ happened that affected the unimproved

value of that land.42

223. The Commissioner points to evidence that puts in context the revaluation of the

subject land, moving from the general to the particular.

224. First, he notes that redeterminations of unimproved values for the ACT are done

as a mass appraisal using a data set with some annual adjustments to the data set

for market trends. Periodically, unimproved values will be regraded based on a

location, sampling, and might be zone specific (for example, all CZ3 zoned

land). There is no specific program set for regrading, and it is often associated

with a specific issue identified in the area. In that context, revaluation is not

usually done on an individual block basis.

225. Second, no regrading of Braddon specifically had been done before Mr King

conducted the wholesale review of unimproved values in Braddon in 2017. That

review was carried out as a combined consequence of objections by Hosmer

Holdings and FANDS. The purpose of the review was to pick up all Crown

lease variations that had occurred and to reflect any changes to lease purpose

40 Taxation Administration Act 1999 section 441 Taxation Administration Act 1999 section 7442 Rates Act 2004 section 11A

60

clauses that had occurred in Braddon. This was the first review of its kind in

relation to Braddon.

226. Third, the subject land was not treated uniquely. Around the time of the Hosmer

Holdings proceedings in mid-2016, the subject site was identified as having had

a change to its lease purpose clause registered. The ACTVO was subsequently

instructed to prepare a revaluation for 2009 to 2016. The Commissioner submits

that:

(a) there is no evidence that FANDS was treated uniquely. Rather, Mr King

gave evidence that other blocks were also reviewed;

(b) the revaluation of the unimproved values for the subject land was

prompted by the Hosmer Holdings objection and subsequent appeal to the

ACAT;

(c) the AVO and then the ACTVO were and remain separate from the

Commissioner, and play no role in decisions made subsequent to the

provision of valuations or valuation advice;

(d) in any event, the email from the Commissioner dated 23 September 2016

(Exhibit S) put a hold on conducting any further reassessments until the

review undertaken by Mr King was complete. There is no evidence that

the Commissioner is not going to make any other reassessments,

retrospective or otherwise.

227. The Commissioner submits that, as a direct consequence of the matters

summarised at [181] above, it is not possible to conclude that:

(a) the Commissioner was made aware of the change to the lease purpose

clause for the subject site up to and including 30 June 2011; and

(b) the Commissioner was notified of that change after 1 July 2011.

228. The Commissioner submits that there is no proper basis to find that, as a result

of the Commissioner having statutory power to work out and assess LVCs from

1 July 2011, the ACTPLA (who previously worked out the CUC for the subject

site) had cause to notify the Commissioner. Nor did the lodgement of the

61

variation to the Crown Lease and its registration by the Registrar-General of

Land Titles constitute notification of the change.43

229. The Commissioner submits that Mr King’s evidence about the mechanism by

which the ACTVO interacts (and the AVO interacted) with the Commissioner

does not give rise to knowledge on the Commissioner’s part such that there was

cause to review the unimproved value of the subject land following the

registration of the variation of the Crown lease.

230. On the other hand, the Commissioner submits that:

(a) FANDS carried the onus of truly and fully disclosing to the Commissioner

all facts and circumstances affecting its tax liability44 in relation to rates,

land tax and the CCMIL;

(b) that obligation is ongoing;

(c) FANDS did not do so for any of the years following the registration of the

Crown lease variation;

(d) Mr Flannery has been the principal point of contact and “property

manager” for FANDS since its creation. He is familiar with FANDS’s

property dealings (having conducted the valuation process for CUC

purposes in 2010, applied to the Tribunal for review of the ACTPLA’s

determination of the CUC, received various company accounts and

notices, and negotiated subleases of the subject property). Despite the

extent of his involvement in such matters, no explanation was given as to

why Mr Flannery (or any director of FANDS, or any other person with a

pecuniary interest in FANDS) did not notify the Commissioner of the

change of purposed clause immediately upon its registration or later upon

receipt of the unimproved value and rates assessment in 2012.

231. Despite these submissions, two adjustments were made to the Commissioner’s

position as expressed in the letter dated 6 September 2016.

232. First, the Commissioner does not maintain the sum of $4,800,000 as the

unimproved value of the subject land at in 2011. The basis for the

Commissioner’s revised approach is found in section 9 of the Taxation

43 See James v Commissioner for ACT Revenue [2013] ACAT 3244 Taxation Administration Act 1999 section 10

62

Administration Act 1999 which provides that the Commissioner may make one

or more reassessments for a tax liability (section 9(1)) but must not make a

reassessment for that tax liability more than five years after the initial

assessment unless, at the time of the initial assessment, all of the facts and

circumstances in relation to that tax liability were not fully truly disclosed to the

Commissioner (section 9(3)(a)(ii)).

233. The initial assessment for rates in relation to the subject land was made on 15

August 2011 and the reassessment was made on 6 September 2016, being more

than five years after the initial assessment for the purposes of section 9(3) of the

Taxation Administration Act 1999. The variation of the Crown lease was

registered on 2 November 2011. Because the variation had not been registered

as at 15 August 2011,45 FANDS could not have fully and truly disclosed that

fact to the Commissioner on or before that date. Consequently the exception set

out in section 9(3)(a)(ii) is not available to the Commissioner for the purpose of

reassessing the rates, land tax and CCMIL liabilities for the period 1 July 2011

to 30 June 2012:

234. The reassessments for rates, land tax and CCMIL liabilities from 1 July 2012

until 30 June 2017 were all within the relevant five year period.

235. The second adjustment follows from the first and relates to the practice of

averaging or smoothing valuations over a three year period. The change in

circumstances affecting the unimproved value of the subject land occurred in

late 2011. In the Commissioner’s submission, the relevant date is 6 October

2011. Under section 14 of the Rates Act 2004, rates are imposed on rateable

land using a formula that adopts a fixed charge plus a percentage rate of the

AUV for the preceding three years for the relevant site.46 Hence, although 2011

45 Also, as noted earlier the application to the Registrar-General to register the variation was not made until 6 October 2011

46 The Dictionary to the Rates Act 2004 defines ‘average unimproved value’ as follows:

average unimproved value, of a parcel of land for a particular year, means the following:

(a)if the parcel has not been rateable previously—the unimproved value of the parcel;

(b) if the parcel has been rateable for less than 3 years—the average unimproved value of the parcel over those years;

(c) in any other case—the average unimproved value of the parcel over the 3 years immediately before the particular year

63

is the first year for which the unimproved value of the subject land would be

redetermined to reflect the change of circumstances, the determinations of

unimproved value in 2009, 2010 and 2011 are necessary in order to calculate

the AUV for 2011. As a consequence of the adjustment to the rates for 2011 to

2012, the AUV calculations for subsequent years up to 30 June 2013 are

affected.

236. The redetermination of unimproved value only applied from the date of the

changed circumstances until 30 June 2012.47 Consequently, the rates, land tax

and CCMIL for the period 1 July 2011 to 30 June 2012 were only adjusted

using the redetermined AUV from 6 October 2011 to 30 June 2012.

237. The unimproved values for each of the years 2012 to 2016 were redetermined

because the change of circumstances was not taken into account for any of those

years. Consequently the rates, land tax and CCMIL for the annual periods from

1 July 2012 to 30 June 2017 were adjusted.

238. The Commissioner submits that, subject to whether the Tribunal requires the

parties to be heard further on a form of orders, the appropriate order that the

Tribunal should make is to:

(a) set aside the decision relating to the objection to the 2011 redetermined

unimproved value and substitute it with the decision that the objection be

allowed; and

(b) remit to the Commissioner the objection decisions for the 2012-2013

redetermined unimproved values to give effect to the issue identified in

relation to the AUV calculation for the subject land.

Consideration and conclusion about the exercise of the Commissioner’s power to reassess tax liability

239. The issue for this Tribunal is whether the Commissioner’s decision to make an

assessment of FANDS’s tax liability for each of the relevant years should be

confirmed, varied or set aside (and either a substitute decision be made by the

Tribunal or the matter be remitted to the Commissioner).

240. The starting point is determining how the Commissioner should have exercised

the discretionary power under section 9 of the Taxation Administration Act

47 See section 11A(4) of the Rates Act 2004

64

1999.That Act gives no express guidance and provides little indirect assistance

on this point.

241. Section 9(1) of the Taxation Administration Act 1999 states that the

Commissioner ‘may’ make one or more reassessments of a tax liability of a

taxpayer. Section 9(2) states that a reassessment of a tax liability ‘must’ be

made in accordance with the current legal interpretations and assessment

practices generally applied by the Commissioner in relation to matters of that

kind, subject to an exception set out in that subsection.

242. Reading subsections (1) and (2) consecutively and as parts of the whole of

section 9, it is clear that subsection (1) confers a discretionary power on the

Commissioner and subsection (2) prescribes the way in which the

Commissioner is to exercise the power should he decide to do so. To read

‘must’ in subsection (2) as a directive to the Commissioner to make a

reassessment of tax liability would be to misunderstand the intent and meaning

of that subsection. The exercise of the discretionary power in subsection (1) is

limited by the provisions in subsection (3) that specify the circumstances in

which the Commissioner ‘must not’ make a reassessment of a tax liability.

243. Subsection (3) suggests that the discretionary power could, and possibly should,

be exercised for up to five years after the initial assessment of the liability.

Subparagraph (3)(a)(ii) is relevant here. It allows the Commissioner to make a

reassessment more than five years after the initial assessment of the liability

where, at the time the initial assessment or reassessment was made:

all the facts and circumstances affecting the liability under the relevant tax law of the person in relation to whom the assessment or reassessment was made were not fully and truly disclosed to the Commissioner. (emphasis added)

244. The ‘relevant tax law’ is the Rates Act 2004.

245. As noted earlier, the Commissioner expressly submits that section 9(3)(a)(ii)

operated to limit the number of years in respect of which he could reassess the

tax liability of FANDS in relation to the subject land because of the date in 2011

on which the ‘change of circumstances’ happened in relation to the Crown

Lease.

65

246. It appears that, in the absence of the type of behaviour referred to in section 9(3)

(a)(ii) (and the other circumstances specified in section 9(3)(a)(i) and (b)), the

Commissioner has an unfettered discretion to make one or more reassessments

of a tax liability of a taxpayer for a period of up to five years, so long as the

requirements of section 9(2) are satisfied.

247. The next issue is to identify the years in respect of which the Commissioner

should have exercised his discretion. As already noted, the notice dated

6 September 2016 included:

(a) revised valuations of the subject land for the years 2009 to 2016;

(b) adjusted rates for the years 2011-12 to 2016-17;

(c) increased land tax for the period from 6 October 2011 to 31

December 2011 and for the years 2012 and 2013; and

(d) adjusted CCMIL for the years 2011-2012 to 2016-2017.

248. The Commissioner submits that historically reviews of unimproved values had

been confined to individual blocks when notification of change had been

forthcoming. Around the time of the Hosmer Holdings proceedings in mid-

2016, the subject site was identified as having had a change to its lease purpose

clause registered. As the email exchange on 26 August 2016 quoted at [202]

above indicates, the ACTVO was subsequently instructed to prepare a

revaluation of the subject land for 2009 to 2016

249. It is noteworthy that in the space of about seven working days a full re-

evaluation of the unimproved values of the subject land for those years could be

undertaken, and decisions about the valuation and consequent adjustments to

rates, land tax and CCMIL could be made and sent to FANDS.

250. Clearly the statement in the covering letter dated 6 September 2016 that the

increases in the unimproved values were a result of “a recent change in purpose

clause” is wrong. The change occurred almost five years earlier. Mr

McInerney’s email to Mr Bustamante on 26 August 2016 notes that the Crown

lease was varied in 2011. The adjustments made to rates, land tax and CCMIL

notified in the letter reflect the impact of that change in each of the years from

November 2011. In light of the relatively scant evidence before the Tribunal,

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the statement about a “recent change” can only be sensibly understood to mean

that the change which occurred five years earlier had only come to the

Commissioner’s attention recently.

251. The evidence supports the conclusion that, once an officer or officers of the

ACTVO became aware of the change of circumstances, action was taken

quickly by them to put the Commissioner in a position where he could make an

informed decision:

(a) whether, and to what extent, the unimproved value of the subject land had

increased in each of the relevant years; and

(b) whether to exercise his discretionary power to redetermine the

unimproved value of the subject land for each of the relevant years, and to

issue notices of adjustments to the rates, land tax and CCMIL as a

consequence.

252. The lateness and speed with which the reassessments were made is reflected in a

letter from FANDS to the ACT Revenue dated 18 October 2016 seeking

12 months to pay the assessed amount of $546,090.30, and a waiver of the

interest on that sum. FANDS wrote:

At no time since the variation [to the Crown Lease Purpose Clause in 2011] was effected have we had any inkling or advice from your office that a change in the value of the site by over $3,000,000 could be expected.

253. By contrast with the period that elapsed between the change of purpose in 2011

and the redetermination of unimproved value in 2016, there was evidence of no

such delay previously. The Crown lease purpose clause for the subject land was

changed after the lodgement of a Variation of Lease on 1 September 2004 (see

Exhibit K). The valuation notices for the years 1 January 2004 until 1 January

2008 show that the unimproved values of the subject land were determined to

be:

1 January 2004 $867,000

1 January 2005 $1,228,000

1 January 2016 $1,719,000

1 January 2007 $1,891,000

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1 January 2008 $1,928,333 (Exhibit L)

254. There was no evidence of the circumstances in which such a prompt revaluation

was made.

255. Mr Flannery identified some blocks in Lonsdale Street and Mort Street where

‘residential’ use was added to their Crown lease purpose clause before that

change was made to the Crown lease of the subject land,48 but said he was not

aware of those blocks being subject to a redetermination of their unimproved

values under section 11A of the Rates Act 2004. When asked why there was a

gap between the unimproved value of the subject land and the unimproved

values of properties at 5 and 7 Lonsdale Street, which also have residential in

their purpose clauses after changes in 2010, Mr King said “we would not have

been notified to review those two properties.”

256. Detailed submissions were made about the circumstances in which the

Commissioner became aware of the need to redetermine the unimproved value

of the subject land and the legal context in which the Commissioner could, or

should, become aware of the change to the purpose clauses of the Crown lease

of the subject land.

257. As noted earlier, FANDS submits that it was under no obligation to advise the

Commissioner about the change to its Crown lease. There was no explanation as

to why that might be so, other than senior counsel’s observations that there is no

form or regulation to give effect to such an obligation and his reference to

Mr Flannery’s evidence.

258. Mr Flannery gave evidence that he had never seen instances where an owner of

property had advised the rating authority that the owner had changed the Crown

lease purpose clause and had suggested that the authority should adjust the

unimproved value of the land. He knew of no one from FANDS who provided

correspondence advising the Commissioner of the change to the Crown lease

purpose clause.

259. I accept Mr Flannery’s evidence on this point, but that does not lead to a

conclusion in FANDS’s favour. All it demonstrates is that FANDS (through its 48 Block 19 section 29 – City Hill, Block 12 section 28 – 5 Lonsdale

Street, and Block 13 section 28 – 7 Lonsdale Street

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appropriate officer or representative) did not, before or at any time when an

assessment of tax liability was made after 2011, disclose to the Commissioner

the change to the purpose clause of the Crown lease which affected its tax

liability under the relevant tax law.

260. There was no suggestion in submissions to the Tribunal of any action being

taken in relation to FANDS under section 10(1) of the Taxation Administration

Act 1999. However, the failure by FANDS to advise the Commissioner of a

relevant ‘change of circumstances’ cannot be used as a shield against the

exercise by the Commissioner of the power to redetermine the unimproved

value of the subject land by reference to that change and then reassess the tax

liability of FANDS for the relevant years.

261. Nor was there any suggestion that the obligation to advise the Commissioner of

the ‘change of circumstances’ falls on others. For example, it seems clear that

the Registrar-General would not inform the Commissioner of a variation of a

Crown lease registered under the Land Titles Act 1925. Under section 178B of

that Act, the Registrar-General is required to give specified types of information

to the Commissioner. That information relates to specified transactions or

instruments lodged for registration (such as a transfer of dutiable property or a

grant of a Crown lease) or a transactional instrument prescribed by regulation.

Neither that section nor the Land Titles Regulation 2015 refers to a variation of

a Crown lease.

262. A differently constituted Tribunal stated in James v Commissioner for ACT

Revenue:

The Registrar-General of Land Titles is a separate entity to the Commissioner for ACT Revenue. … Registration of a lease with the Land Titles Office does not amount to compliance with the obligation to notify the Commissioner of the rental status of a property.49

263. That case is distinguishable from the present matters. However, by analogous

reasoning, the fact that the variation to the purpose clause of the Crown lease of

the subject land was registered with the Land Titles Office does not mean that

the Commissioner has, by reason of that registration, been made fully and truly

aware of that change in circumstances.

49 James v Commissioner for ACT Revenue [2013] ACAT [32], [33], [35]

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264. Although section 11(1) of the Taxation Administration Act 1999 states that the

Commissioner may make an assessment (and, presumably, a reassessment) of

the tax liability of a taxpayer ‘on the information that the Commissioner has

from any source at any time the assessment is made’, FANDS could not rely on

the diligence of the Commissioner or valuers at the ACTVO to check every

change to each Crown lease in the ACT, or the possibility of an individual

officer who has actual knowledge of a particular change will as soon as

practicable place that information before the Commissioner.

265. I am not satisfied that there is evidence to establish that in late 2011 the

Commissioner had, or should be deemed to have had, knowledge of the

registration of the variation to the Crown lease. Despite suggestions that at least

one officer of the ATO and then the ACTVO (Mr McInerney) was, or might

have been, involved or associated with actions taken in relation to the variation

of the Crown lease and the resolution of the associated CUC issue, there was no

evidence to demonstrate that he informed the Commissioner of those matters.

The only precise evidence is the email exchange on 26 August 2016 after

Mr McInerney had received information by email about the application to vary

the Crown lease to include residential use in 2011. As noted earlier,

Mr McInerney did not give evidence in the hearing of these matters.

266. In any case, as it happens, because the variation occurred when a CUC was

made in a process that commenced before the ACTPLA was exercising a

delegation from the Commissioner, the Commissioner could not be taken to

have been aware of the change.

267. Although the Commissioner is obliged by section 10 of the Rates Act 2004 to

redetermine annually the unimproved value of each parcel of rateable land, the

evidence clearly demonstrated the magnitude of that task (in terms of the

number of leases to be valued) and the limited resources devoted to the task (in

terms of the number of ACTVO valuers allocated to it). The evidence about:

(a) the different periods between the Variation of Lease of the subject land

made in 2004 and then in 2011, and the subsequent redeterminations of its

unimproved value; and

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(b) the apparently different approach to redetermination of three other blocks

in the Braddon precinct following variations to their leases before the

variation of the Crown lease of the subject land (as noted in [255]),

illustrates the somewhat episodic and unpredictable nature of aspects of the

redetermination process.

268. In summary, it is apparent that redeterminations of the unimproved value of a

particular parcel will be made when the Commissioner becomes aware of a

‘change of circumstances’ of that parcel, or as part of a revaluation to reflect

changes in the market for land in an area. In other words, the Commissioner

usually attempts to satisfy the statutory obligation by broad scale revaluations

and only focuses on individual leases in certain circumstances.

269. As senior counsel for the Commissioner noted, the Rates Act 2004 does not

prescribe the process that the Commissioner is to follow when determining the

unimproved value of each parcel of land. When section 10 is read alongside

section 11A (and section 11), it is open to the Commissioner to employ a bulk

process for valuing leasehold parcels, while dealing separately with individual

leases when the Commissioner becomes aware of changes in circumstances (or

errors). Those factors arguably emphasise the onus on the ratepayer under the

Taxation Administration Act 1999 to inform the Commissioner of the ‘change of

circumstances’ in relation to their lease.

270. It might be possible to adopt procedures which introduce more rigour and

predictability into the system, so that the Commissioner is notified promptly of

lease variations that might affect the unimproved value of individual parcels of

land. However, the absence of such procedures cannot determine the outcome in

this case.

271. The fact remains that, whatever the reason, the Commissioner did not become

actually aware of the ‘change of circumstances’ until 2016. Having been

informed of that change, he moved quickly to ensure that a revaluation of the

subject land was made.

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272. The real question is whether, in those circumstances, it was appropriate for the

Commissioner to issue revised rates, land tax and CCMIL assessments for each

year in which the revised lease purpose clause operated.

273. The sections of the Rates Act 2004 quoted earlier make it clear that the

Commissioner has an obligation to determine the unimproved value of each

parcel of rateable land for each financial year and may redetermine the

unimproved value of a parcel of land if a change of circumstances affects the

unimproved value of that land. The Taxation Administration Act 1999 sets out

the scheme under which the Commissioner reassesses the consequent change in

tax liability.

274. Ideally the Commissioner would act as soon as practicable after a change in

circumstances has occurred. That did not occur in the present case. However,

the fact that section 9 of the Taxation Administration Act 1999 provides that the

Commissioner cannot backdate these changes for more than five years, other

than in limited circumstances, indicates that the legislature was aware that there

might be a delay of some years between a significant ‘change in circumstances’

in relation to parcels of rateable land and a consequential reassessment of tax

liability.

275. It is undoubtedly inconvenient and unsettling for a lessee to be advised of

changes of the magnitude of those in this case years after the ‘change of

circumstances’ occurs. I accept that FANDS probably experienced difficulties

with budgeting, cash flow and financing, as well as business continuity, as a

consequence of the delay in the revaluation and reassessment of rates, land tax

and CCMIL. However, FANDS should have expected a change to its tax

liability at some stage. The valuation evidence given by Mr McCann is a clear

indication that FANDS would have known that the change in the Crown lease

purpose clause had a significant effect on the value of the subject land and

hence the rates, land tax and CCMIL payable in relation to it.

276. I am not satisfied that the actions taken by the Commissioner targeted FANDS

to the exclusion of other lessees in the Braddon area. The evidence has not

established that FANDS was treated differently or unfairly in all circumstances.

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277. Accordingly, although it would have been preferable for the Commissioner to

have acted much sooner after the change in the purpose clauses in the Crown

lease for the subject land, the Commissioner should not be prevented from

reassessing the rates, land tax and CCMIL payable in relation to the subject land

for the period allowed by the section 9 of the Taxation Administration Act 1999.

Findings and conclusions

278. For the reasons set out above, the Tribunal finds that:

(a) the unimproved value of the subject land for the year 2011 was

$4,300,000; and

(b) the unimproved value of the subject land for the years 2012 to 2016 was

$4,800,000.

279. The Tribunal also finds that the Commissioner was entitled to exercise

discretionary power in relation to the reassessments of rates, land tax and the

CCMIL for the years 2012, 2013, 2014, 2015 and 2016.

280. However, having regard to:

(a) the amounts of money that the Commissioner assessed were owed by

FANDS for each of the years between 2011 and 2016;

(b) the particular financial circumstances confronted by FANDS in obtaining

the money to pay the amounts said to be owed by the date nominated by

the Commissioner;

(c) the Commissioner’s requirement that FANDS pay additional interest as

part of the repayment schedule; and

(d) the fact that the Commissioner incorrectly made a reassessment for 2011,

the Tribunal finds that the Commissioner must repay FANDS:

(a) the amount incorrectly determined to be owed for 2011 and any

subsequent year as a consequence of the application of the averaging

provision of section 14 of the Rates Act 2004; and

(b) any amount paid by FANDS as interest on:

(i) the repayments made after 15 October 2016, being the sums

calculated in respect of those periodic payments; and

(ii) the amount incorrectly assessed for the year 2011,

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(iii) the amount incorrectly assessed for the year 2012 and any

subsequent year once the averaging provision is applied,

but not the amount of interest owed on the amounts correctly

assessed for the subsequent years.

281. Given the operation of section 9(3)(a)(ii) of the Taxation Administration Act

1999 in the circumstances of this case, the Commissioner appropriately

submitted that the Tribunal should set aside the decision relating to the

objection to the 2011 redetermined unimproved value and substitute it with the

decision that the objection be allowed.

282. It follows from the preceding findings that, in accordance with section 68(3) of

the ACAT Act, the Tribunal should:

(a) set aside the Commissioner’s decision relating to the objection to the 2011

redetermined unimproved value of the subject land and substitute a

decision that the objection be allowed;

(b) remit to the Commissioner the objection decision for 2012-2013 to give

effect to the issue identified in relation to the average unimproved value of

the subject land;

(c) confirm the Commissioner’s decisions for subsequent years; and

(d) set aside the Commissioner’s decision in relation to some payments of

interest by FANDS as noted in [280].

283. Consequently, it is not appropriate for the Tribunal to make final orders at this

stage but:

(a) to remit to the Commissioner not only the objection decision for 2012-

2013 but also the calculation of the amounts of interest repayable in

relation to the items listed in [280]; and

(b) to direct the parties to prepare a draft minute of orders to give effect to the

Tribunal’s findings.

Orders

284. The Tribunal orders that:

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1. The Commissioner’s decision relating to the objection to the 2011

redetermined unimproved value of the subject land be set aside and the

objection allowed.

2. The objection decision made by the Commissioner for ACT Revenue for

2012-2013 be remitted to the Commissioner to give effect to the issue

identified in relation to the average unimproved value of the subject land.

3. The Commissioner calculate the amount of any interest paid by FANDS

on:

(a) the repayments made after 15 October 2016, being the sum

calculated only in respect of those periodic payments;

(b) the amount incorrectly assessed for the year 2011; and

(c) the amount incorrectly assessed for the year 2012 and any

subsequent year once the averaging provision of section 14 of the

Rates Act 2004 is applied.

4. The parties provide the Tribunal with a draft minute of orders to give

effect to the findings and conclusions set out in paragraphs [278]-[282] of

these reasons for decision by 29 January 2018.

5. Each party has liberty to apply to the Tribunal on three days’ notice in

order to seek clarification in relation to any of the findings and

conclusions set out in paragraphs [278]-[282] of these reasons for

decision.

………………………………..President G Neate AM

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HEARING DETAILS

FILE NUMBER: 16, 23, 24, 25, 26, 27/2017

PARTIES, APPLICANT: FANDS (ACT) Pty Ltd

PARTIES, RESPONDENT: Commissioner for ACT Revenue

COUNSEL APPEARING, APPLICANT Mr P Walker SC and Ms A Irving

COUNSEL APPEARING, RESPONDENT Mr C Erskine SC and Ms K Katavic

SOLICITORS FOR APPLICANT Trinity Law

SOLICITORS FOR RESPONDENT ACT Government Solicitor

TRIBUNAL MEMBERS: President G Neate AM

Assessor J Trickett

DATES OF HEARING: 12, 13, 14 September 2017

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